Adjusting the supply of money and increasing government spending are

Question

Adjusting the supply of money and increasing government spending are the two methods available to the country of Paisi to stimulate its economy. While both methods can create economic growth, increased government spending brings unemployed resources into use, producing extra output and income and benefiting the economy in the long run. Therefore, by increasing spending, the government of Paisi will do the most that it can do to stimulate its economy.

Which of the following is an assumption on which the argument depends?

A. There are substantial government works projects that have yet to be done, such as the building of roads and infrastructure.

B. The government of Paisi would not be forced to increase spending by a specific amount on a specific timetable.

C. The government of Paisi could opt to take no action at all.

D. Adjusting the supply of money could not be used effectively in conjunction with increasing government spending.

E. The economy requires stimulation measures more than other measures, such as steps to stabilize the economy.

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tgsankar10 · Answer

There are two methods available to the Government of Paisi to stimulate its economy. 
Both methods can create economic growth. Increasing spends will benefit the economy in the long run.

Conclusion:  Increasing spending will do the most that can be done to stimulate economy

A:  How the government will increase spending is out of scope here. Also, there are other ways for a Govt to increase spendings like giving subsidies, tax cuts etc.   NOT CORRECT

B:  How much the Government plans to spend or should spend is out of scope.   NOT CORRECT

C:  If the Govt does nothing, there is no point in evaluating the different methods of stimulating economy.   NOT CORRECT

D:    CORRECT.   Adjusting the supply of money could not be used effectively in conjunction with increasing government spending. Govt will implement only one method and hence increasing spending will give most benefit instead of adjusting supply of money. This is the assumption the argument depends.

E:  Other measures are out of scope for this argument.   NOT CORRECT

captain0612 · Answer

IMO Choice D

Argument talks about two methods, Adjusting supply of money and increasing govt. spending, that are available to country Paisi to stimulate economy.

Evidence 1 - While both methods have advantages, Increased govt. spending has long term benefits

Conclusion - Increasing govt. spending will do the most to stimulate the country's economy.

Question - Assumption.

While we know that Increased govt. spending has long term benefits, the author didn't explicitly mention some information about Adjusting supply of money, and based on which he draws conclusion. So, find the choice that bridges the gap between evidence and the conclusion.

A. There are substantial government works projects that have yet to be done, such as the building of roads and infrastructure.  Irrelevant, Pending govt jobs would not bridge the gap but rather weakens the overall reasoning (Doubts on the implementation of these spending projects), and furthermore implementation of these projects will not bridge the gap  Incorrect

B. The government of Paisi would not be forced to increase spending by a specific amount on a specific timetable.  Out of scope, as the fluctuations or the logistics of the spending doesn't really matter, since the argument only cares about the best method to stimulate economy  Incorrect

C. The government of Paisi could opt to take no action at all.  The choice of not doing anything is irrelevant again, how does doing nothing stimulate economy based on the information proided in the argument?  Incorrect

D. Adjusting the supply of money could not be used effectively in conjunction with increasing government spending.   Correct , This talks about combination of the 2 methods isn't effective. Now it makes sense that only one could achieve the best results.

E. The economy requires stimulation measures more than other measures, such as steps to stabilize the economy.  Not very clear, the stimulation can be done by both the methods and doesn't help the argument  Incorrect

bronaugust · Answer

To solve this question, let us deploy    IMS's four-step technique   .

STEP #1:  IDENTIFY THE QUESTION TYPE BY READING THE QUESTION STEM

The question stem states, 'Which of the following is an assumption on which the argument depends?' Clearly, we are dealing with an assumption question.

QUESTION TYPE:   Assumption

Now that the question type is identified, let us proceed to the second step.

STEP #2:  DECONSTRUCT THE ARGUMENT

In an assumption question, it is a must to deconstruct the argument by figuring out the conclusion and the premise.

CONCLUSION:   By increasing spending, the government of Paisi will do the most that it can do to stimulate its economy.

PREMISE:   While adjusting the supply of money and increasing government spending can create economic growth, increased government spending brings unemployed resources into use, producing extra output and income and benefiting the economy in the long run.

Now that the argument is deconstructed, let us proceed to the third step.

STEP #3:    KNOW WHAT THE RIGHT ANSWER IS SUPPOSED TO DO

In an assumption question, the right answer must bridge the gap between the conclusion and the premise. The author concludes that the government of Paisi will do the most that it can do to stimulate its economy by increasing spending. In the premise, however, he states that both adjusting the supply of money and increasing government spending can create economic growth (although it is increased government spending that brings unemployed resources into use, producing extra output and income and benefiting the economy in the long run). So, while the premise speaks of adjusting the supply of money, the conclusion does not. This is the gap we need to bridge. Evidently, the author regards increasing spending as more valuable than adjusting the supply of money when it comes to stimulating the economy. Our right answer must therefore be on these very lines.

SHADOW ANSWER:    I ncreasing spending is more valuable than adjusting the supply of money when it comes to stimulating the economy.

Now that we know what the right answer is supposed to do, let us proceed to the final step.

STEP #4:    ELIMINATE INCORRECT ANSWER OPTIONS

Answer options that go beyond the scope of the argument and/or those that do not impact the argument in any way can be eliminated.

A. There are substantial government works projects that have yet to be done, such as the building of roads and infrastructure. -   OUT OF SCOPE   -  The argument does not concern itself with projects that have yet to be done.  -   ELIMINATE

B. The government of Paisi would not be forced to increase spending by a specific amount on a specific timetable. -   MAKES NO IMPACT   -  Whether or not the government of Paisi would be forced to increase spending by a specific amount on a specific timetable is irrelevant as it does not bridge the gap between the conclusion and the premise.  -   ELIMINATE

C. The government of Paisi could opt to take no action at all. -   MAKES NO IMPACT   -  Again, whether or not the government of Paisi could opt to take action is irrelevant. Does not bridge the gap!  -   ELIMINATE

D. Adjusting the supply of money could not be used effectively in conjunction with increasing government spending. -   BRIDGES THE GAP/MATCHES THE SHADOW ANSWER   -  What was missing from the conclusion but mentioned in the premise is taken care of by this answer choice. If adjusting the supply of money could be used effectively in conjunction with increasing government spending, the author would not have arrived at the conclusion that the government of Paisi will do THE MOST that it can do to stimulate its economy  by increasing spending.  -   KEEP

E. The economy requires stimulation measures more than other measures, such as steps to stabilize the economy. -   OUT OF SCOPE   -  Not worried about the comparison with other measures.  -   ELIMINATE

Hence, D has to be the right answer.

Bunuel · Answer

OFFICIAL EXPLANATION:

Reading the question: the question is asking for an "assumption." We parse by looking for opinion. Here, the opinion is indicated by "therefore": the conclusion is the last sentence. The argument is that, of two ways to stimulate the economy, increasing spending is a better way of stimulating the economy. The middle sentence gives the sole piece of evidence for this conclusion. We fixate on the phrase "the long run," a critical detail. The argument depends on the idea that long-run benefits are important enough to be a decisive way of determining which option here is better.

Applying the filter: Choices (B) and (E) both concern the timetable or long-run versus short-run, but our prediction isn't helping us evaluate them quickly. We can switch to the negation test.

Logical proof: negating (A), say there were not substantial work projects. That is harmful, but there might be other ways to stimulate spending. So (A) is out. On to (B): what if increasing spending had to be done on a specific timetable? That would not necessarily be a problem. So (B) is out. In (C), whether or not the government has to stimulate the economy is a separate question from what the best way to do it is. Choice (E) is irrelevant. The argument concerns only the best way to stimulate, not whether to stimulate or how important it is to stimulate. So (E) is out. That leaves us with choice (D). We can apply the negation test to (D). What if both methods could be used together? The prompt does not specify that these two measures are mutually exclusive. That appears to be an assumption. And if they aren't mutually exclusive, the government might not be doing the so-called "most that it can do" by just stimulating.

The correct answer is (D).

Adjusting the supply of money and increasing government spending are

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Adjusting the supply of money and increasing government spending are

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