A recession is not caused by any economic force other than a nationwid

Question

A recession is not caused by any economic force other than a nationwide loss of confidence. If the economy is perceived as being unstable, banks are conservative in lending money, investors take fewer risks, and hence economic growth is slowed.

Which of the following, if true, would most strengthen the argument above?

A. A recession is severely affected by the response of the Federal Reserve’s setting of interest rates.

B. A recession can be brought on by the failure of a major bank that had been loaning money.

C. Slowed economic growth is not the only result of a recession.

D. When investors begin taking greater risks it is enough to stimulate economic growth.

E. It is a fallacy to assume that economic growth is necessary for economic stability.

icandy · Answer

Wow! is all I can say.. Tough one my choice E

Source OA & OE?

alpha_plus_gamma · Answer

Recently, I have started looking at every CR question from If->Then construction perspective first and this one is perfect if then question

IMO answer should be D.

For any if X-> then Y, construction, only thing we can conclude is if NOT Y -> then NOT X. .....(Let me call this rule A.)

Here we are given:
1) nationwide loss of confidence is the only cause of recession.

1) If {economy is NOt stable} -> Then {banks are conservative} -> Then {investors take fewer risks} -> Then { Slow economic growth}

HTH

AndersonBound · Answer

I'm going to go with D.

Here are my thoughts:
Given - Recession is caused from a loss of confidence. If the economy appears to be bad, investors / banks get conservative and therefore the economy slows (recession).

Which option strengthens the opinion?
A - out of scope; no mention of the Fed.
B - while it may be true, a failed bank bringing about a recession does not help the author's argument.
C - out of scope; again, looking for points to help the author's point.
E - out of scope; we don't care about economic stability.

D - tells us that if investors take risks, the economy grows. This mates with the given info. If investors do not take risks, the economy slows. If they take risks, the economy will be stimulated.

bibha · Answer

Is D the OA?? I think "enough to stimulate economic growth" is too extreme, isn't it?

iwillcrackgmat · Answer

A recession is severely affected by the response of the Federal Reserve’s setting of interest rates. --> Weakening the argument

A recession can be brought on by the failure of a major bank that had been loaning money. --> Weakening the argument

Slowed economic growth is not the only result of a recession. --> Neither weakens nor strengthens

When investors begin taking greater risks it is enough to stimulate economic growth. --> strengthens the argument

It is a fallacy to assume that economic growth is necessary for economic stability. --> Neither weakens nor strengthens

kraizada84 · Answer

okay D is best here.
E just weakens the argument by reversing the conditional statement.

chesstitans · Answer

what is the main conclusion in this question?
what is the answer?

chesstitans · Answer

B, or D must be the answer. 
I picked B, but now I think D is correct 
use the negation technique, if inventors do not take greater risks, there will bo no stimulate for economic growth => economy slows down

Madhavi1990 · Answer

I would like to know if D isnt a bit too extreme - the logic begins from'loss of confidence' (presumably certain economic conditions) to banks lending less and then investors suffering --> it doesnt seem that it starts with the investors that D implies.

"When investors begin taking greater risks it is
enough to stimulate economic growth." -- if we put this in the context above - investors CANNOT take a risk because something else stops them (banks). It is not just dependent on them.
E - "It is a fallacy to assume that economic growth
is necessary for economic stability." -- it says, economic growth is not required for economic stability (risk taking is);and it strengthens the main argument.

Please explain why OA is D

chesstitans · Answer

the first sentence is the main argument, and the second sentence is an example.
D is relating to both sentences => D is correct. 
ALso, all other options are out of scope.

longhaul123 · Answer

what is the source of this question?

GMATNinjaTwo · Answer

As described in the  Rules to post on the Verbal Forum , please tag questions with the source, category, and difficulty level. Also, enter the questions exactly as they appear in the original source.

Thanks!

VerbalBot · Answer

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A recession is not caused by any economic force other than a nationwid

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A recession is not caused by any economic force other than a nationwid

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