It is currently 20 Jan 2018, 13:08

### GMAT Club Daily Prep

#### Thank you for using the timer - this advanced tool can estimate your performance and suggest more practice questions. We have subscribed you to Daily Prep Questions via email.

Customized
for You

we will pick new questions that match your level based on your Timer History

Track

every week, we’ll send you an estimated GMAT score based on your performance

Practice
Pays

we will pick new questions that match your level based on your Timer History

# Events & Promotions

###### Events & Promotions in June
Open Detailed Calendar

# Verbal Review 2 16th Ed- It is often said that high rates of inflation

Author Message
TAGS:

### Hide Tags

Current Student
Joined: 28 Nov 2014
Posts: 918

Kudos [?]: 231 [0], given: 79

Concentration: Strategy
Schools: Fisher '19 (M)
GPA: 3.71
Verbal Review 2 16th Ed- It is often said that high rates of inflation [#permalink]

### Show Tags

24 Nov 2015, 02:35
5
This post was
BOOKMARKED
00:00

Difficulty:

5% (low)

Question Stats:

81% (02:13) correct 19% (01:33) wrong based on 618 sessions

### HideShow timer Statistics

It is often said that high rates of inflation tend to diminish people’s incentive to save and invest. This view must be incorrect, however, because people generally saved and invested more of their income in the 1970’s when inflation rates were high than they did in the 1980’s when inflation rates were low.Of the following, the best criticism of the argument above is that it overlooks the possibility that

A all people do not respond in the same way to a given economic stimulus
B certain factors operating in the 1980’s but not in the 1970’s diminished people’s incentive to save and invest
C the population was larger in the 1980’s than it was in the 1970’s
D the proponents of the view cited would stand to gain if inflation rates become lower
E a factor that affects people's savings behavior in a certain way could affect people’s investment behavior quite differently
[Reveal] Spoiler: OA

Kudos [?]: 231 [0], given: 79

Current Student
Joined: 28 Nov 2014
Posts: 918

Kudos [?]: 231 [0], given: 79

Concentration: Strategy
Schools: Fisher '19 (M)
GPA: 3.71
Verbal Review 2 16th Ed- It is often said that high rates of inflation [#permalink]

### Show Tags

24 Nov 2015, 02:35
3
This post was
BOOKMARKED
It is often said that high rates of inflation tend to diminish people’s incentive to save and invest. This view must be incorrect, however, because people generally saved and invested more of their income in the 1970’s when inflation rates were high than they did in the 1980’s when inflation rates were low.

Of the following, the best criticism of the argument above is that it overlooks the possibility that

(A) all people do not respond in the same way to a given economic stimulus
(B) certain factors operating in the 1980’s but not in the 1970’s diminished people’s incentive to save and invest
(C) the population was larger in the 1980’s than it was in the 1970’s
(D) the proponents of the view cited would stand to gain if inflation rates become lower
(E) a factor that affects people's savings behavior in a certain way could affect people’s investment behavior quite differently

Kudos [?]: 231 [0], given: 79

SVP
Joined: 06 Nov 2014
Posts: 1904

Kudos [?]: 564 [0], given: 23

Re: Verbal Review 2 16th Ed- It is often said that high rates of inflation [#permalink]

### Show Tags

24 Nov 2015, 20:53
Steinbeck wrote:
It is often said that high rates of inflation tend to diminish people’s incentive to save and invest. This view must be incorrect, however, because people generally saved and invested more of their income in the 1970’s when inflation rates were high than they did in the 1980’s when inflation rates were low.Of the following, the best criticism of the argument above is that it overlooks the possibility that

A all people do not respond in the same way to a given economic stimulus
B certain factors operating in the 1980’s but not in the 1970’s diminished people’s incentive to save and invest
C the population was larger in the 1980’s than it was in the 1970’s
D the proponents of the view cited would stand to gain if inflation rates become lower
E a factor that affects people's savings behavior in a certain way could affect people’s investment behavior quite differently

Here we a continuity in the statement by finding a statement that gives us the reason for the anomaly.
Option B clearly does that by saying that "certain factors operating in the 1980’s but not in the 1970’s diminished people’s incentive to save and invest" and is the correct continuation of the sentence.

Correct Option: B

Kudos [?]: 564 [0], given: 23

Senior Manager
Joined: 04 Feb 2014
Posts: 271

Kudos [?]: 137 [1], given: 164

Location: India
Concentration: General Management, Entrepreneurship
GPA: 3
WE: Project Management (Manufacturing)
Re: Verbal Review 2 16th Ed- It is often said that high rates of inflation [#permalink]

### Show Tags

25 Jan 2016, 23:23
1
KUDOS
A all people do not respond in the same way to a given economic stimulus wE are not concerned about people's response
B certain factors operating in the 1980’s but not in the 1970’s diminished people’s incentive to save and invest Looks good
C the population was larger in the 1980’s than it was in the 1970’s Population has nothing to do with savings and investments
D the proponents of the view cited would stand to gain if inflation rates become lower Out of scope
E a factor that affects people's savings behavior in a certain way could affect people’s investment behavior quite differently This is a generalization, can't be the answer
_________________

Kudos if you like my post

Kudos [?]: 137 [1], given: 164

Intern
Joined: 15 Nov 2015
Posts: 47

Kudos [?]: 9 [0], given: 1

Re: Verbal Review 2 16th Ed- It is often said that high rates of inflation [#permalink]

### Show Tags

14 Apr 2016, 05:58
Correlation vs Causation. Inflation rate may not be the only factor influencing people's saving and investment behaviour. Other factor may have caused inflation and influenced people's behaviour.

Argument commits this fault.

Kudos [?]: 9 [0], given: 1

Intern
Joined: 15 Nov 2015
Posts: 47

Kudos [?]: 9 [0], given: 1

Re: Verbal Review 2 16th Ed- It is often said that high rates of inflation [#permalink]

### Show Tags

22 Apr 2016, 12:34
This argument is an opinion. Argument assumes that the facts are sufficient to prove the conclusion.

Fallacy: Just because people saved and invested more in the 1970s than in 1980s is sufficient to prove the conclusion? Are there other possibilities that could have explained the observation?

Kudos [?]: 9 [0], given: 1

Intern
Joined: 07 Aug 2015
Posts: 2

Kudos [?]: 1 [0], given: 0

Re: Verbal Review 2 16th Ed- It is often said that high rates of inflation [#permalink]

### Show Tags

07 Jan 2017, 01:33
1
This post was
BOOKMARKED
[Reveal] Spoiler:
It is often said that high rates of inflation tend to diminish people’s incentive to save and invest. This view must be incorrect, however, because people generally saved and invested more of their income in the 1970’s when inflation rates were high than they did in the 1980’s when inflation rates were low.Of the following, the best criticism of the argument above is that it overlooks the possibility that

A all people do not respond in the same way to a given economic stimulus
B certain factors operating in the 1980’s but not in the 1970’s diminished people’s incentive to save and invest
C the population was larger in the 1980’s than it was in the 1970’s
D the proponents of the view cited would stand to gain if inflation rates become lower
E a factor that affects people's savings behavior in a certain way could affect people’s investment behavior quite differently

Situation
People generally saved and invested more in the 1970’s when inflation was high than in the 1980’s when inflation was low, despite the fact that it is commonly believed that high inflation discourages savings and investment.

Reasoning
Why does the observation about savings, investment, and inflation rates in the 1970’s and 1980’s not justify the conclusion that high inflation does not generally diminish people’s incentive to save and invest? The argument observes that over the course of two decades there was a positive rather than a negative correlation between inflation on the one hand and savings and investment on the other. It infers from this that high rates of inflation do not tend to diminish people’s incentive to save and invest. Is this inference justified? Note that the claim that this argument is trying to discredit is not that high rates of inflation always diminished people’s incentive to save and invest. Rather, the claim is merely that high rates of inflation tend to do this. The argument overlooks the possibility that during the two decades in question other factors may have caused a positive correlation to briefly appear even if in general the correlation is negative.

A The argument is compatible with the hypothesis that some people respond to inflation by saving and investing more, while others do not.
B Correct. If these other factors, unrelated to the inflation rate, that operated in the 1980’s but not the 1970’s, created an even greater disincentive to savings and investment than high inflation rates provide, then those trends do not provide evidence about the general relationship among savings, investment, and inflation.
C The argument appears to concern savings and investment per capita, so total population size should be irrelevant. But increasing population would not explain declining total amounts of savings and investment, either.
D If anything, the possibility that the proponents’ ulterior motives distorted their reasoning would help to support the argument’s conclusion that the proponents’ view is incorrect.
E The argument addresses this possibility by presenting evidence that inflation was positively correlated with both savings and investment during the 1970’s and 1980’s.

Kudos [?]: 1 [0], given: 0

Verbal Forum Moderator
Joined: 13 Feb 2015
Posts: 890

Kudos [?]: 9 [0], given: 32

Re: Verbal Review 2 16th Ed- It is often said that high rates of inflation [#permalink]

### Show Tags

27 Jul 2017, 22:04
Merged topics. Please, search before posting questions!
_________________

Kudos [?]: 9 [0], given: 32

Status: It's now or never
Joined: 10 Feb 2017
Posts: 287

Kudos [?]: 28 [1], given: 51

Location: India
GMAT 1: 650 Q40 V39
GPA: 3
WE: Consulting (Consulting)
Re: Verbal Review 2 16th Ed- It is often said that high rates of inflation [#permalink]

### Show Tags

15 Aug 2017, 23:26
1
KUDOS
People saved and invested more in 1980s when the inflation rates were higher, than in 1970s when the inflation rates were lower. Dispite the common belief that high inflation discourages savings and investments. The correct choice is B.
_________________

Class of 2019: Mannheim Business School
Class 0f 2020: HHL Leipzig

Kudos [?]: 28 [1], given: 51

Manager
Joined: 20 Aug 2015
Posts: 65

Kudos [?]: 10 [0], given: 149

GMAT 1: 710 Q50 V36
Re: Verbal Review 2 16th Ed- It is often said that high rates of inflation [#permalink]

### Show Tags

16 Aug 2017, 09:53
keats wrote:
It is often said that high rates of inflation tend to diminish people’s incentive to save and invest. This view must be incorrect, however, because people generally saved and invested more of their income in the 1970’s when inflation rates were high than they did in the 1980’s when inflation rates were low.Of the following, the best criticism of the argument above is that it overlooks the possibility that

A all people do not respond in the same way to a given economic stimulus
B certain factors operating in the 1980’s but not in the 1970’s diminished people’s incentive to save and invest
C the population was larger in the 1980’s than it was in the 1970’s
D the proponents of the view cited would stand to gain if inflation rates become lower
E a factor that affects people's savings behavior in a certain way could affect people’s investment behavior quite differently

A all people do not respond in the same way to a given economic stimulus We are not concerned about how people responded, rather we are interested in their investment strategy
B certain factors operating in the 1980’s but not in the 1970’s diminished people’s incentive to save and invest Correct. Could be the reason that there were other factors at play which affected the way the people behaved in a certain way in the 70s vs the 80s.
C the population was larger in the 1980’s than it was in the 1970’s we are not told about the proportion of the population who invested and saved in the 70s and 80s.
D the proponents of the view cited would stand to gain if inflation rates become lower a wishful thinking. the argument says nothing about the views of the proponents of the idea
E a factor that affects people's savings behavior in a certain way could affect people’s investment behavior quite differently we are told nothing about the differences between investment and saving behavior.

Kudos [?]: 10 [0], given: 149

Re: Verbal Review 2 16th Ed- It is often said that high rates of inflation   [#permalink] 16 Aug 2017, 09:53
Display posts from previous: Sort by