Hi kobel51,

DS questions that ask you to focus on the relationships between numbers can sometimes seem "easy", but you have to make sure that you're correct in your assumptions. The best way to do that is to TEST Values and PROVE what the correct answer actually is. Many people who try to "talk" their way through this question and they would end up getting it wrong.

The question asks for the percent change in NET INCOME on Jan. 1, 1989 when his gross income and deductions increased (net income = gross income - deductions). We don't know anything about those values yet.

Fact 1: Gross income increased by 4%

We don't know what happened to the deductions, so there are limitless possible answers.
Fact 1 is INSUFFICIENT

Fact 2: Deductions increased by 15%

We don't know what happened to the gross income, so there are limitless possible answers.
Fact 2 is INSUFFICIENT

Combined, we know that gross income increased by 4% and deductions increased by 15%, BUT we don't know the relative values of either.

For example:
If Gross Income was $100, it would increase to $104
But the Deductions could have been $10 (which would then become $11.50) or $20 (which would then become $23) or any other value...

Since the question is asking for the change in NET INCOME, we run into the same problems that we had before: there are limitless possible answers.
Combined, INSUFFICIENT

Final Answer: E

GMAT assassins aren't born, they're made,
Rich