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# V21-37

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Manager
Joined: 19 May 2015
Posts: 129
V21-37  [#permalink]

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16 Feb 2018, 14:25
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Difficulty:

45% (medium)

Question Stats:

62% (01:44) correct 38% (01:28) wrong based on 21 sessions

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Community spokesperson: As a result of a recent surge of foreclosures, many homes in our town are vacant and falling into disrepair. Property values have already plummeted and, unless preventative action is taken, will likely continue to plummet as panicked residents, fearing a further decline in the value of their homes, begin to leave town. To prevent this snowball effect, the town should encourage potential buyers to purchase the vacant homes by offering special mortgages with low interest rates for the first five years.

Which of the following, if true, provides the strongest indication that the plan recommended by the community spokesperson is not likely to achieve its goal?

A. Many of the town's residents have lived in the area for over 20 years and will not want to leave their homes, despite falling property values.
B. There are several other ways to prevent panicked residents from leaving town besides offering special mortgages.
C. Crime rates have risen significantly since the recent surge of foreclosures, making the town a less desirable place to live.
D. Low interest rates will likely attract some buyers who would be unable to make their mortgage payments once the interest rate goes up after the first five years.
E. In order to subsidize the special mortgages offered by lenders as part of the plan, the town would have to cut funding for many community programs.
Manager
Joined: 19 May 2015
Posts: 129
Re V21-37  [#permalink]

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16 Feb 2018, 14:25
Official Solution:

Community spokesperson: As a result of a recent surge of foreclosures, many homes in our town are vacant and falling into disrepair. Property values have already plummeted and, unless preventative action is taken, will likely continue to plummet as panicked residents, fearing a further decline in the value of their homes, begin to leave town. To prevent this snowball effect, the town should encourage potential buyers to purchase the vacant homes by offering special mortgages with low interest rates for the first five years.

Which of the following, if true, provides the strongest indication that the plan recommended by the community spokesperson is not likely to achieve its goal?

A. Many of the town's residents have lived in the area for over 20 years and will not want to leave their homes, despite falling property values.
B. There are several other ways to prevent panicked residents from leaving town besides offering special mortgages.
C. Crime rates have risen significantly since the recent surge of foreclosures, making the town a less desirable place to live.
D. Low interest rates will likely attract some buyers who would be unable to make their mortgage payments once the interest rate goes up after the first five years.
E. In order to subsidize the special mortgages offered by lenders as part of the plan, the town would have to cut funding for many community programs.

The passage describes the following "snowball effect"

Many homes are vacant and falling into disrepair

We can infer that this has caused property values in the town to plummet

Fearing a further decline in the value of their homes, panicked residents will begin to leave town

If residents leave town, there will be an even greater number of vacant homes, which will presumably cause property values to continue to fall

If property values continue to fall, more residents will presumably panic and leave their homes

The community spokesperson has a plan: she recommends that, in order to prevent this snowball effect, "the town should encourage potential buyers to purchase the vacant homes by offering special mortgages with low interest rates for the first five years." And the question is asking us to find the answer choice that most strongly indicates that this plan is unlikely to achieve its goals.

(A) Many of the town's residents have lived in the area for over 20 years and will not want to leave their homes, despite falling property values

The purpose of the plan is to prevent the snowball effect. Choice (A) is a reason why residents would NOT leave, which would lessen the snowball effect. If anything, this might contribute to the success of the recommended plan. Choice (A) certainly does not suggest that the plan will fail, so eliminate (A)

(B) There are several other ways to prevent panicked residents from leaving town besides offering special mortgages

The spokesperson does not say that implementing the recommended plan is the ONLY way to prevent panicked residents from leaving town. The spokesperson simply suggests that this is ONE way to prevent the snowball effect. Eliminate (B)

(C) Crime rates have risen significantly since the recent surge of foreclosures, making the town a less desirable place to live

If crime rates have risen and the town is a less desirable place to live, potential buyers might be discouraged from buying homes in the town, even if special mortgages are offered. Choice (C) is detrimental to the spokesperson's plan, so let's hang on to this one

(D) Low interest rates will likely attract some buyers who would be unable to make their mortgage payments once the interest rate goes up after the first five years

Notice that choice (D) says "SOME buyers". Sure, some buyers might leave after five years, but as long as the town can encourage people to fill the vacant homes, the snowball effect will be prevented and the plan will succeed. If MOST buyers were to leave after five years, the town could run into the same problem, but if only SOME buyers leave, there is no reason to expect that to happen. Eliminate (D)

(E) In order to subsidize the special mortgages offered by lenders as part of the plan, the town would have to cut funding for many community programs

The argument does not discuss how the special mortgages would be funded. Cutting the funding for many community programs might be a negative consequence of implementing the plan, but this does not suggest that the plan will fail. Eliminate choice (E)

Choice (C) is the best answer

Answer: C
Intern
Joined: 01 May 2017
Posts: 10
Re V21-37  [#permalink]

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15 Aug 2018, 14:22
I think this is a high-quality question and the explanation isn't clear enough, please elaborate. I am confused between choice A and C. I would think that if the residents are unlikely to want to leave their homes, then the plan would not be needed... But this might only hamper/address half the the plan rather than weaken it...? Is this correct?
Intern
Joined: 25 Jul 2012
Posts: 4
Re: V21-37  [#permalink]

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16 Aug 2018, 01:41
bbn2 wrote:
I think this is a high-quality question and the explanation isn't clear enough, please elaborate. I am confused between choice A and C. I would think that if the residents are unlikely to want to leave their homes, then the plan would not be needed... But this might only hamper/address half the the plan rather than weaken it...? Is this correct?

Hi, the answer choice A says that the people are unlikely to leave "despite falling prices". However people may still leave due to another reason.
Answer choice addresses exactly that. It cites another reason pointing out that the people may leave.

Hope it's clear now.
Re: V21-37   [#permalink] 16 Aug 2018, 01:41
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