Concerned about financial well-being of its elderly citizens, the government of Runagia decided two years ago to increase by 20 percent the government-provided pensionpaid to all Runagians over 65. Inflation in the intervening period has been negligible,and the increase has been duly received by all eligible Runagians. Nevertheless,many of them are no better off financially than they were before the increase, in large part because ________.

A. They rely entirely on the government pension for their income--- if so then their financial condition shud improve given the fact that inflation has been negligible....so this is not the answerB. Runagian banks are so inefficient that it can take up to three weeks to cash a pension check---3 weeks !!! the govt increased pensions 2 years ago --- b is also not good
C. They buy goods whose prices tend to rise especially fast in times of
inflation --- inflation is negligible --- c does not hold goood
D. The pension was increased when the number of elderly Runagians below the poverty level reached an all-time high --- if pension was increased for ppl below poverty line then their condition shud improve
E. In Runagia children typically supplement the income of elderly parents, but only by enough to provide them with a comfortable living.

suppose earlier elderly ppl were getting $ 80 from govt and they needed $120 to live comfortably enough .. their children paid them $40 ...

now govt is paying them 20% more i.e = $96 ...and inflation is negligible so they still need $120 ... now their children will pay only ENOUGH amount to make their life comfortable --- their children will now pay $24 ..so net net elder ppl still get $120 -- and hence the answer


OA is E. Please explain the logic behind this.

I wld like to open this post again....

I know the OA but I still think C shld b d correct answer...

In apple100's assumption if v suppose elderly people were getting 100$ (instead of 80$) but needed 120$ to live comfortably enough...add to this 20% which makes the pension as 120$, which is sufficient to live comfortably without children help...
so E is inconclusive...

As for C, it doesn't mean that if inflation is negligible, then there won't b ne goods in the market whose prices can't rise.

Please correct me if I am wrong....