Privatization of the large state enterprises that comprise the

Question

Privatization of the large state enterprises that comprise the industrial sector in Russia is proceeding slowly, due to competing claims of ownership by various groups. Continued government subsidization of these enterprises creates large deficits that drive up the inflation rate and cause the ruble's value to decline. It is therefore unlikely that the government will make the ruble freely convertible to Western currencies until the question of ownership of state enterprises has been resolved.

If the author's prediction concerning the ruble is accurate, which of the following conclusions can most reliably be drawn?

(A) The industrial sector accounts for at least fifty percent of Russia's economic activity.

(B) Making the Russian ruble freely convertible to Western currencies will cause the ruble's value to decline.

(C) The Russian government can indefinitely withstand the expense of subsidiary state enterprises.

(D) The Russian government is among the groups claiming ownership of certain state enterprises.

(E) The Russian government is under pressure from the West to make the ruble freely convertible to Western currencies.

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Shwarma · Answer

Option D?
This passage went over my head.
What I understood is--> Russia wants to privatize, but is also subsidizing which is causing rubel value to decrease. So it cannot allow free conversion, coz it is currently declining due to the subsidization cycle.
I felt except D nothing can be inferred.
as other options have strong words, which were unture so...

Jsgambach · Answer

ANS B in my opinion.

The current situation is inflationary due to a depreciation in the Russian Ruble. Until this situation (privatization) is solved, then the Russian gvmt will probably not make the Ruble freely convertible to other strong currencies such as Euro, Pound or US Dollar.
Why? because this will cause Russians to "escape" from Ruble to USD for example, causing the Ruble to lose even more value, which can cause other major economic problems.

Ill go with B here.

Bunuel · Answer

KAPLAN OFFICIAL EXPLANATION:

B

This question asks for the most reliable conclusion based on the author's prediction concerning the ruble. The author describes a chain of cause and effect and ends with a prediction: Competing claims of ownership are slowing efforts to privatize state enterprises; these enterprises must still be subsidized by the government; government subsidies lead to large deficits; deficits drive up the inflation rate; high inflation causes the ruble's value to decline. In a nutshell, the disagreement over ownership is causing the ruble to decline in value. The author's conclusion, which we're told to accept as accurate, is that until the question of ownership has been resolved, the Russian government probably won't make the ruble freely convertible to Western currencies.

Be on the lookout for new ideas that occur in the conclusion. Here you should have thought, "What more is going on here? What else is the author assuming?" We want the connection the author sees between the competing claims for ownership and the conclusion's completely new idea of making the ruble freely convertible. Well, her point about the competing claims is that they cause the ruble's value to decline. So look for a choice that connects the action of making the ruble freely convertible to a decline in the ruble's value. (B) fits this scenario by concluding that making the ruble freely convertible to Western currency would also cause the ruble's value to decline, thereby (inferably) making matters worse. (B) explains quite nicely why the state's ownership of enterprises postpones the ruble's convertibility.

If you didn't see (B)'s place in the argument, you could have arrived at it anyway by eliminating the choices that couldn't be correct (a Kaplan method that works rather nicely here). (A) is unwarranted. Nothing in the argument justifies assigning a percentage to the industrial sector. (C) contradicts the spirit of the passage, which says that government subsidies are creating a strain, in the form of large deficits, on the economy. The statement that the government can withstand this strain is definitely farfetched. Contraiy to (D), the argument doesn't state that the government is among the parties squabbling over ownership of state enterprises, but only that until the squabble is resolved the enterprises
must remain in state hands. (E) would explain why the Russian government might want to make the ruble convertible in the first place, but one, there's no hint of it in the passage, and two, it doesn't jibe with the conclusion that the government will probably wait to make the ruble convertible.

AbhishekP220108 · Answer

Bunuel

Isn't this yhe whole logic

​Ownership Dispute->Stops Privatization. No Privatization->Government must pay Subsidies.Subsidies->High Deficit->High Inflation. High Inflation->weak Ruble->Cannot be converted to Western currency.

The question asks if the prediction is correct that until Ownership Dispute is not resolved, the rest of the chain is stuck.

Option B says Making the Russian ruble freely convertible to Western currencies will cause the ruble's value to decline. If ruble is convertible then the dispute is over. If the dispute is resolved then how the ruble is still declining, we are assuming here and in inference why the assumption is needed. The option has to be supported by argument right.

Not able to process how B is correct. Even though I understand all the others are incorrect

hr1212 · Answer

Logic chain is -

Competing claims of ownership
-> Privatization slows
-> Subsidies continue
-> Large deficits
-> Inflation rises
-> Ruble value declines

Government avoids free convertibility until ownership claims are resolved. (Author's prediction)

Think about what's the connection b/w convertibility and ownership claims.

This prediction could be accurate only if, under the current situation, introducing convertibility while these claims remain unresolved would allow the same economic forces to keep acting, resulting in further economic downfall and ultimately causing the ruble’s value to decline.

guddo · Answer

You’re processing it correctly: the passage gives a chain where  subsidies and inflation  drive the ruble down, and that makes convertibility unlikely until ownership is resolved. It never says convertibility itself causes the decline.

So B reverses causality: it claims  convertibility leads to decline , but the passage says  decline (from deficits/inflation) blocks convertibility . That’s why B is not supported.

Alilee · Answer

This claim is confusing to interpret.

Claim: Privatization has been slow because of the question of ownership, continued government subsidization makes ruble's decline. Rubles won't be freely convertiable until the questions of ownership is resolved. 
Goal: inference conclusion

(B) Making the Russian ruble freely convertible to Western currencies will cause the ruble's value to decline.
 At first, i thought this is wrong becuase i thought the claim says rubles decline because ownership is not resolved and in the meantime, they still need to pay for these. But the claim is actucally saying the opposite.

Claim is saying, if these enteprises are priviatized, then the government will have to pay for these <- making rubles go down. <- in this case, then it make sense

(D) The Russian government is among the groups claiming ownership of certain state enterprises.
 I thoguht this was correct at first becuase the passage says "state enterprises" <- and the government is part of it.  
 Got this wrong becuase I interpreted the claim wrong. The various group are probably talking about the competting offers for privatization <- which won't include the governement in this case.

Privatization of the large state enterprises that comprise the

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Privatization of the large state enterprises that comprise the

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