Critical Reasoning

In 1983 Argonia’s currency, the argon, underwent a reduction in value relative to the
world’s strongest currencies. This reduction resulted in a significant increase in
Argonia’s exports over 1982 levels. In 1987 a similar reduction in the value of the
argon led to another increase in Argonia’s exports. Faced with the need to increase
exports yet again, Argonia’s finance minister has proposed another reduction in the
value of the argon.

Which of the following, if true, most strongly supports the prediction that the finance minister’s plan will not result in a significant increase in Argonia’s exports next year?
A. The value of the argon rose sharply last year against the world’s strongest currencies.
B. In 1988 the argon lost a small amount of its value, and Aronian exports rose slightly in 1989.
C. The value of Argonia’s exports was lower last year than it was the year before.
D. All of Argonia’s export products are made by factories that were operating at full capacity last year, and new factories would take years to build.
E. Reductions in the value of the argon have almost always led to significant reductions in the amount of goods and services that Argonians purchase from abroad.


[spoiler]OA - D
[/spoiler]
E is a closest answer as it describes the cause but different effect. thus weakening. My reasoning to weaken using E is that if the people reduce to buy goods from abroad then there will be increase in purchase of domestic goods and less for exports.

Can anyone validate my reasoning to eliminate?

With E, we can't infer that if people decrease buying form abroad, then they will start buying domestic products...maybe reduction in economy serves as deterrent on the purchasing power of consumers, both at home and abroad.
Though i am not sure, why D is correct

Though i am not sure, why D is correct Confused

D is correct because even if you reduce the value of currency the alternativce possibility that the factories are operating at full capacity will not be able to increase production. So the production that was year earlier will remain the same even in the current year and hence the exports would not rise.

E is wrong because the effect of imports has nothing/little to do with the amount of exports. Even if the citizens buy less imports, the exports will continue to increase. The assumption is that there is a need to increase exports so they can't be operating at full capacity. If this is true, that would mean that weakening their currency will lead to an increase in exports and an increase in production capacity regardless of domestic demand. Plus we don't know what their exports are. If they produce raw materials that they don't have the ability to manufacture into finished goods, domestic demand would not affect net exports.

schumi_gmat wrote:In 1983 Argonia’s currency, the argon, underwent a reduction in value relative to the
world’s strongest currencies. This reduction resulted in a significant increase in
Argonia’s exports over 1982 levels. In 1987 a similar reduction in the value of the
argon led to another increase in Argonia’s exports. Faced with the need to increase
exports yet again, Argonia’s finance minister has proposed another reduction in the
value of the argon.

Which of the following, if true, most strongly supports the prediction that the finance minister’s plan will not result in a significant increase in Argonia’s exports next year?
A. The value of the argon rose sharply last year against the world’s strongest currencies.
B. In 1988 the argon lost a small amount of its value, and Aronian exports rose slightly in 1989.
C. The value of Argonia’s exports was lower last year than it was the year before.
D. All of Argonia’s export products are made by factories that were operating at full capacity last year, and new factories would take years to build.
E. Reductions in the value of the argon have almost always led to significant reductions in the amount of goods and services that Argonians purchase from abroad.


[spoiler]OA - D
[/spoiler]
E is a closest answer as it describes the cause but different effect. thus weakening. My reasoning to weaken using E is that if the people reduce to buy goods from abroad then there will be increase in purchase of domestic goods and less for exports.

Can anyone validate my reasoning to eliminate?

Actually this question is rather simple.

D is the answer because it is the only choice than can logically be true to make the minister's plan not to work.

Lower the value --> Higher the export . This is the link.
B,C are pretty much out of scope.

A is negated since just because we don't know by how much the minister is planning to reduce the value of the currency.

E cannot be the answer since it actually refers to Imports .To me this is completely out of scope of this passage.

D is correct, because even if the currency value decreases, Argonia can't sell anymore goods; it will be out of stock.

Please explain the options D in details that why it is the correct option...

Regards,
Phil

In my opinion D is the most logical one.