what is the correct answer.

You have mentioned that OA is D.....is that correct?

Apologies for typo.... OA is E

Only problem I can see here is that "two-year" is adjective , "low" is also an adjective hence ambiguity wether "two-year" modifies "low" OR a noun "level"

simplyjat wrote:According to some economists, the July decrease in unemployment so that it was the lowest in two years suggests that the gradual improvement in the job market is continuing.

(A) so that it was the lowest in two years
(B) so that it was the lowest two-year rate
(C) to what would be the lowest in two years
(D) to a two-year low level
(E) to the lowest level in two years

OA E
What's wrong with D

The same question troubled me as well. The answer, seemingly is, that "two-year low level" is a shortened version of "lowest level in two years". Only those noun phrases in which the preposition is of, are considered correct on GMAT. There are exceptions to this rule as well, but at least for this case, this rule clearly eliminates D.

Can any GMAT Expert provide explanation for each option?

A - we use "so that" to combine two clauses and "the July decrease" is a noun phrase
B - repeats the use of "so that"
C - it is unnecessarily lengthy and stylistically flawed
D - this expression is incorrect, we use it when something lasts for two years so it has a completely different meaning than the original sentence
E - correct - it conveys the right meaning and it is grammatically correct

Kasia@MasterGMAT wrote:A - we use "so that" to combine two clauses and "the July decrease" is a noun phrase
B - repeats the use of "so that"
C - it is unnecessarily lengthy and stylistically flawed
D - this expression is incorrect, we use it when something lasts for two years so it has a completely different meaning than the original sentence
E - correct - it conveys the right meaning and it is grammatically correct

Hey, can you elaborate your explanation of D. I did not get it. Thanks

Sure.
"a two-year low level" - could mean that unemployment was low for two years and definitely not that in July it reached the lowest level in two years