GMAT Prep Question- Darfir - GREAT QUESTION

rosh26

12 years ago and again 5 years ago, there were extended periods when the Darfir Republic's currency, the pundra, was weak: its value was unusually low relative to the world's most stable currencies. Both times a weak pundra made Dirfir's manufactured products a bargain on world markets, and Darfir's exports were up substantially. Now some politicians are saying that, in order to cause another similarly sized increase in exports, the government should allow the pundra to become weak again.

Which of the following, id true, provides the government with the strongest grounds to doubt that the politicians' recommendation, if followed, will achieve its aim?

a) Several of the politicians now recommending that the pundra be allowed to become weak made the same recommendation before each of the last 2 periods of currency weakness

b) After several decades of operating well below peak capacity, Darfir's manufacturing sector is now operating at near peak levels.

c) The economy of a country experiencing a rise in exports will become healthier only if the county's current currency is strong or the rise in exports is significant

d) Those countries whose manufacturing products compete with Diarfir's on the wordl market all currently have stable currencies.

e) A sharp improvement in the efficiency of Darfir's manufacturing plants would make Darfir's product a bargain on world markets even without any weakening of the pundra relative to other currencies.

Answer B

So usually, i can usually understand the answer if I pick the wrong choice in CR - not so much in this case. Can the experts please explain?

pranavc · Posted: Fri Aug 29, 2008 11:14 am Post subject:

OK. I will give this a shot. The recommendation from the politicians is that the currently be allowed to become weak again. We need to find a choice that emphasizes the fact that following this recommendation will NOT bring about the increase in exports that the country witnessed earlier.

A: This would actually reinforce the fact that the politicians may be correct. Hence, this option is wrong.

B: If the country can manufacture more, it is not going to be able to export more so regardless of the currency being allowed to become weak, they can manufacture at a level required for an increase in exports. Hence, this is the correct answer.

C: Irrelevant. We only care about an option that deals with an increase in exports - not a general improvement in the economy.

D: This option simply mention competitor countries' stable currencies. Irrelevant in the context of the politicians' recommendations.

E: This does not necessarily weaken the recommendation of the politicians. It simply provides another solution to increasing exports.

I hope this helps.

youcan · Posted: Fri Aug 29, 2008 9:05 pm Post subject:

Here the assumption is According to politicians history will repeat it self. evidence in B shows against that

Vignesh.4384 · Posted: Fri Aug 29, 2008 10:08 pm Post subject:

If Darfir's manufacturing sector is now operating at near peak levels, why would the govt want to decrease value the currency ?? It is not going 2 make a diff in the export

option E uses the word would and not will .. there is a diff .

niraj_a · Posted: Sat Aug 30, 2008 7:36 am Post subject:

the answer should be E.

B is wrong because the focus of the stimulus is on weakening the pundra. if manufacturing capacity is at peak levels and the pundra is expensive relative to world currencies, then exports will not increase.

rosh26 · Posted: Sat Aug 30, 2008 3:36 pm Post subject:

OA is B though...

banker1 · Posted: Sat Aug 30, 2008 4:08 pm Post subject:

I disagree with the OA as well. What is the source? I also believe the answer should be E.

My understanding of the question is as follows:

Assumptions/ Evidence:
When the pundra is weak, the products are cheap, and exports are high.

Conclusion:
In order to increase exports the pundra should become weak again.

(A) as pranavc said, this strenghtens the recommendation.

(B) is out of scope. The passage makes no mention of the manufacturing sector and the levels at which it's operating.

(C) is counter to the assumptions/ evidence provided. It says a country's economy will become healthier ONLY if the country's currency is strong. The complete opposite of what was said in the passage.

(D) irrelevent. The recommendation is to let the pundra get weak again.

(E) the best choice, weakens the recommendation by saying with efficiencies Darfir's products can be a bargin WITHOUT any weakening of the pundra.

James_83 · Posted: Sat Aug 30, 2008 11:42 pm Post subject:

Yes,answer seems to be E.
This is the best option that puts the doubt on the politician's recommendations...

rosh26 · Posted: Sun Aug 31, 2008 11:55 am Post subject:

Source is GMAT Prep so I don't really think we can disagree with it.

rosh26 · Posted: Sun Aug 31, 2008 11:59 am Post subject:

Can any of the experts help out with this one??

banker1 · Posted: Sun Aug 31, 2008 2:39 pm Post subject:

blue_lotus · Posted: Sun Aug 31, 2008 2:45 pm Post subject:

The Answer is B as pranavc has mentioned above.

The purpose or the aim is TO INCREASE EXPORT ,
the method suggested by politition is WEAKEN PUNDRA

The question asks us to find an answer which IF TRUE , will provide
strong ground to DOUBT the politicians recomendation.

To Answer this question we have to consider each statement in ANSWER to be true and try to check whether it provides a ground to DOUBT politicians claim.

choice B: Darfir's manufacturing sector is now operating at near peak levels.
IF we consider this as true then we can see that the POLITICIANS recommendation will not have the recomended outcome of INCREASED EXPORT.

choice E:A sharp improvement in the efficiency of Darfir's manufacturing plants would make Darfir's product a bargain on world markets even without any weakening of the pundra relative to other currencies.

IF we consider E as TRUE we see that it provides an ALTERNATIVE to increase export and NOT explain whether the politicians recommendation would have worked or NOT.

THE ANSWER here clearly is B

banker1 · Posted: Sun Aug 31, 2008 4:48 pm Post subject: