Finance minister

mgmt_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?

According to Minister's Prediction

Cause : Devaluation Of Argon
Effect : Increase in exports

A. The value of the argon rose sharply last year against the world's strongest
currencies.
Incorrect : This does nothing to weaken the conclusion.

B. In 1988 the argon lost a small amount of its value, and Aronian exports rose
slightly in 1989.
Incorrect : This strengthens the minister's prediction

C. The value of Argonia's exports was lower last year than it was the year before.
Incorrect : Comparison between exports of last year to the year before is irrelevant to the scope of the argument.

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.
Correct : If the factories are not operating at full capacity there would not be enough production to increase exports. And if new factories would take years to build there is hardly any chance that exports would increase. Hence even when cause occurs (devaluation of argon) the stated effect (increase in exports) would not occur. This would seriously undermine the minister's prediction .

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.
Incorrect : Good n services purchased by argonians from abroad is completely irrelevant.