Critical Reasoning

Businesses are suffering because of a lack of money available for development loans. To help businesses, the
government plans to modify the income-tax structure in order to induce individual taxpayers to put a larger
portion of their incomes into retirement savings accounts, because as more money is deposited in such
accounts, more money becomes available to borrowers.

Which of the following, if true, raises the most serious doubt regarding the effectiveness of the government's
plan to increase the amount of money available for development loans for businesses?


(A) When levels of personal retirement savings increase, consumer borrowing always increases
correspondingly.
(B) The increased tax revenue the government would receive as a result of business expansion would not
offset the loss in revenue from personal income taxes during the �rst year of the plan.
(C) Even with tax incentives, some people will choose not to increase their levels of retirement savings.
(D) Bankers generally will not continue to lend money to businesses whose prospective earnings are
insuf�cient to meet their loan repayment schedules.
(E) The modi�ed tax structure would give all taxpayers, regardless of their incomes, the same tax savings for
a given increase in their retirement savings.


My assumption-People .being young,will not draw money from the account for a long time.

Answer D came close to this .Please explain what was wrong in my thinking.

src_saurav wrote:Businesses are suffering because of a lack of money available for development loans. To help businesses, the
government plans to modify the income-tax structure in order to induce individual taxpayers to put a larger
portion of their incomes into retirement savings accounts, because as more money is deposited in such
accounts, more money becomes available to borrowers.

Which of the following, if true, raises the most serious doubt regarding the effectiveness of the government's
plan to increase the amount of money available for development loans for businesses?


(A) When levels of personal retirement savings increase, consumer borrowing always increases
correspondingly.
(B) The increased tax revenue the government would receive as a result of business expansion would not
offset the loss in revenue from personal income taxes during the �rst year of the plan.
(C) Even with tax incentives, some people will choose not to increase their levels of retirement savings.
(D) Bankers generally will not continue to lend money to businesses whose prospective earnings are
insuf�cient to meet their loan repayment schedules.
(E) The modi�ed tax structure would give all taxpayers, regardless of their incomes, the same tax savings for
a given increase in their retirement savings.


My assumption-People .being young,will not draw money from the account for a long time.

Answer D came close to this .Please explain what was wrong in my thinking.

Premise: The plan will induce individuals to put more money into their retirement accounts, making more funds available for BORROWERS.
Conclusion: There will be an increase in the amount of money available for BUSINESSES.

BORROWERS ≠ BUSINESSES.
To weaken the conclusion, the correct will answer will show that making funds available for BORROWERS ≠ increasing the amount of money available for BUSINESSES.

A: When levels of personal retirement savings increase, consumer borrowing always increases correspondingly.
Implication:
An increase in CONSUMER borrowing will mean LESS MONEY available for BUSINESSES, weakening the conclusion that there will be an increase in the amount of money available for BUSINESSES.
.
The correct answer is A.

D: Bankers generally will not continue to lend money to businesses whose prospective earnings are insuf�cient to meet their loan repayment schedules.
Even if some businesses do not qualify for a loan, money would still be AVAILABLE for businesses that DO quality.
Thus, D does NOT weaken the conclusion that there will be an increase in the amount of money available for BUSINESSES.
Eliminate D.

I Chose E!

Mitch, why it cannot be option C.
My thought -with no increase in level of retirement saving money available to the borrowers will be less.

ash4gmat wrote:Mitch, why it cannot be option C.
My thought -with no increase in level of retirement saving money available to the borrowers will be less.

some means AT LEAST ONE.
C implies the following:
Even with tax incentives, at least one person will choose not to increase his level of retirement savings.
The actions of one person are not sufficient to affect the conclusion.
Eliminate C.