Over the last eight years, the Federal Reserve Bank has raised

Question

Over the last eight years, the Federal Reserve Bank has raised the prime interest rate by a quarter-point more than ten times. The Bank raises rates when its Board of Governors fears inflation and lowers rates when the economy is slowing down.

Which of the following is the most logical conclusion for the paragraph above?

(A) The Federal Reserve should be replaced with regional banks that can respond more quickly to changing economic conditions.

(B) The Federal Reserve has raised the prime rate in recent years to try to control inflation.

(C) The economy has entered a prolonged recession caused by Federal Reserve policies.

(D) The monetary policy of the United States is no longer controlled by the Federal Reserve.

(E) The Federal Reserve has consistently raised the prime rate over the last several years.

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Shwarma · Answer

Option B

Higher rate- to lower inflation and lower rate during slow down.

Option B and E

B - says the to control inflation( no strong words since the passage says fear of inflation, so fits)
E- consistently raised the rates.. we don't know that maybe they decreased some time in the middle or kept it the same. too many assumption is needed so eliminate

neilacesthegmat · Answer

The passage mentions that the Federal Reserve raises rates when it fears inflation so option (B) The Federal Reserve has raised the prime rate in recent years to try to control inflation is the most logical conclusion.
Answer:B

For answer choice (E), "The Federal Reserve has consistently raised the prime rate over the last several years.", which suggests  periodic increases, not necessarily a consistent pattern .  For example, if the Federal Reserve raised rates three times in one year, then did not raise rates at all the next year, and then raised rates two times the following year, this would not be considered a consistent pattern of raising rates every year, though it would still be more than ten times over eight years.

Purnank · Answer

Initially i though E.
But, Yes B is better than E.

(B) "The Federal Reserve has raised the prime rate in recent years to try to control inflation." This conclusion logically follows from the information provided in the passage.  The passage states that the Federal Reserve raises rates when it fears inflation, and it has raised rates more than ten times in the last eight years. Therefore, it is logical to conclude that these rate increases were to control inflation.

(E) "The Federal Reserve has consistently raised the prime rate over the last several years."  While this statement is true according to the passage, But it doesn't provide the reason behind the rate increases, which the passage indicates is to control inflation.

Bunuel · Answer

OFFICIAL EXPLANATION:

You know from the language that this is a drawing-conclusions question, so you don’t have to look for a conclusion in the argument. Just read through the premises and formulate a quick conclusion, something like “Because the Federal Reserve has raised interest rates many times over the last eight years, it must fear inflation.”

Eliminate answer choices that aren’t relevant or that contain information not presented by the premises. The argument says nothing about regional banks or the termination of the Federal Reserve’s control over U.S. monetary policy, so you can disregard Choices (A) and (D). Then get rid of any choices that don’t take all premises into consideration. Choice (E) just reiterates the first premise, so it’s wrong. You’re left with Choices (B) and (C), but Choice (C) contradicts the information in the premises. The problem says the Federal Reserve responds to the economy, not the other way around, so it’d be wrong to say the Federal Reserve causes a recession. Choice (B) is clearly the best answer. It takes into consideration the information that the Federal Reserve has raised rates and that raising rates is its response to inflation.

Be careful to avoid relying on outside knowledge or opinions when answering drawing conclusions questions. You may have studied the Federal Reserve Bank and have opinions about monetary policy. Choices (A), (C), and (D) reflect some possible opinions about the Federal Reserve. Don’t get trapped into choosing an answer because it supports your opinion.

A_Nishith · Answer

The passage mentions that the Federal Reserve raises rates when it fears inflation so option (B) The Federal Reserve has raised the prime rate in recent years to try to control inflation is the most logical conclusion.
Answer:B

SameLog · Answer

B is the answer, because besides from mentioning the usual statement in a rephrased manner that the banks have raised the rates because of fear of inflation it is showing that it is doing so to control inflation.

Over the last eight years, the Federal Reserve Bank has raised

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Over the last eight years, the Federal Reserve Bank has raised

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