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Thanks daagh , but can we say "this indicates that.."?
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@vinzycoolfire: Yes I would gladly use “this indicates that” in contexts which follow up with a clause such as ‘this indicates that something is wrong; this indicates that the Fed will now raise the key rates’ etc
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"Seems to indicate" is right, so C is the correct answer. Moreover, use the Verb- Adj- Noun method ( MGMAT SC) to decide.
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Here is the official explanation from Kaplan

Answer C-The proper idiomatic construction is "seems to indicate that". (C) is the only choice that uses this proper construction. (A), (B) and (E) are all ungrammatical. (D) would be correct if the idea after "of" did not contain a verb – for example, "seems indicative of either a genetic effect or a modeling effect or both" would be correct. However because the idea following is a clause with a subject and verb "either a genetic effect or a modeling effect – or some combination of the two –is . . .", the proper construction is "seems to indicate that". Therefore, (C) is the best answer.
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Once again I got caught in the weeds and didn't see the forest. If you remove the superfluous fluff after the subject and connect it with verb its easy to see the correct grammatical structure.

Empirical evidence that people who compulsively hoard tend to have first-degree relatives who also do so,seems like it is indicative that to indicate that either a genetic effect or a modeling effect - or some combination of the two - is at work.

A.like it is indicative that
B.as if to indicate
C.to indicate that
D.indicative of
E.like an indication of
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The underlined portion uses the adjective "indicative" improperly. The proper usage is indicative of, not indicative that. Here's a correct example: This behavior is indicative of depression. But correcting this usage wouldn't fix the sentence, because the sentence actually calls for a verb to be used, not an adjective. The author is not saying that empirical evidence is like something else but rather than empirical evidence seems to be doing something. So the proper usage is to indicate that ... [one of the effects is at work].

A quick look at the choices reveals that they vary significantly, with no clear pattern or grouping. The choices are short, so just proceed to examine them more thoroughly.

(A) can be eliminated immediately, since it contains the error spotted during the initial reading of the sentence.

(B) is incorrect because it adds another, unnecessary layer of uncertainty. It makes it sound as though the empirical evidence doesn't actually "seem to indicate" the effects. Rather, the empirical evidence seems "as if" to indicate. There is no reason for these extra words.

(D) properly pairs the adjective form of "indicative" with "of." However, as noted above, a verb is called for here, not an adjective. (D) would have been correct had the rest of the sentence been seems indicative of either a genetic effect or a modeling effect or both. However, because what comes next is a clause with a subject and verb, what is needed is a verb plus "that" to introduce the clause.

(E) changes "indicative" into the noun "indication." The problem is that after the word "of," a simple noun should follow (for example, seems like an indication of success). But what follows here is a clause with a subject and verb. (E) ends up in the form seems like an indication of either X or Y is at work. This makes no sense.

(C) changes the adjective "indicative" to the correct verb form, "to indicate," and adds "that" to introduce the clause coming up. (C) is correct.

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