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28 Jun 2013, 02:48
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Be sure to select an answer first to save it in the Error Log before revealing the correct answer (OA)!
Difficulty:
55%
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Question Stats:
62% (01:44) correct
38%
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wrong
based on 742
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It often happen that, as a recession deepens, the stock market soars. Later after the economy has become stronger, the market often appears to become shaky. For these reasons, many have concluded that the market is a poor indicator of economic trends.
Which of the following, if true, best counters the argument presented above?
A. Stock prices do not reflect the current state of the economy, but rather the expert judgement of investors about the future strength of the economy
B.Brokers and analysts say that stock prices are inconsistent when business is beginning to emerge from a slump
C. The crash of the stock market in 1929 preceded a prolonged and severe depression
D.Economists note that sharp gains in the stock market has sometimes been recorded in the worst months of recession
E. some brokers and analysts believe that the stock market is a useful index of economic trends because it is updated more frequently than other indicators
Which of the following, if true, best counters the argument presented above?
A. Stock prices do not reflect the current state of the economy, but rather the expert judgement of investors about the future strength of the economy
B.Brokers and analysts say that stock prices are inconsistent when business is beginning to emerge from a slump
C. The crash of the stock market in 1929 preceded a prolonged and severe depression
D.Economists note that sharp gains in the stock market has sometimes been recorded in the worst months of recession
E. some brokers and analysts believe that the stock market is a useful index of economic trends because it is updated more frequently than other indicators
28 Jun 2013, 15:06
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nt2010
Hi nt2010
I think I can help you a bit.
Fact: As a recession deepens, the stock market soars.
Fact: Later after the economy has become stronger, the market often appears to become shaky.
The main conclusion is: The market is a poor indicator of economic trends.
Assumption is: Stock prices reflect the current state of the economy. It means what stock prices demonstrate what the economy experiences.
You can weaken the argument by showing that the stock prices move faster than the current state of the economy. For instance, as you know the economy NEVER goes up or down FOREVER. There are always peak and trough. After the economy hits the trough, it will go back. The pattern is the same, after the economy hits its peak, it will go down. That's the logic.
How about A?
You say: A states the same. You're not correct. The complete sentence is: "Stock prices do not...., but rather the expert judgement.......".
A says: "Stock prices do not reflect the current state of the economy, but rather the expert judgement of investors about the future strength of the economy".
Clearly, A attacks the conclusion by showing that the market always moves faster than the current economy. Hence A is correct.
How about E? "some brokers and analysts believe that the stock market is a useful index of economic trends because it is updated more frequently than other indicators"
You see E says "Just some brokers and Analysts believe that stock market is good indicators" ==> It also means other people don't believe, otherwise E should state "Every body believes that....". Thus, E does not weaken the conclusion.
Hope it clears you doubt.
Regards.
General Discussion
28 Jun 2013, 03:40
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summer101
I chose A as it "best" countered the argument.
B - This one mentions the opinion of Brokers/analysts which may/may not be true. So not strong enough
C - It gives a historical evidence which may not recur always and in all situations.
D - This actually supports the argument.
E - No relation between updation of the indicators and accuracy of their implications!
