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Critical reasoning assumption question

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Critical reasoning assumption question

by nitya.oberoi » Thu May 15, 2008 5:51 am
Hi guys,

I have a question that I'm having a hard time understanding why the answer is what it is. Any help would be appreciated.

The downturn in the economy last year has prompted many companies to
make widely publicized layoffs, resulting in thousands of lost jobs.
Economists predicted that these layoffs would cause people generally to
cut back on their discretionary spending, even if their jobs were
secure, in anticipation of coming hard times. However, this prediction
has not come to pass, since there has been no increase in the amount of
money set aside by the general public in savings accounts.

Which one of the following is an assumption on which the argument
depends?

1. The economy has not improved in recent months.
2. There has been no increase in the amount of money invested in
stocks, certificates of deposit, or other savings vehicles.
3. Salaries have decreased as a result of the economic downturn.
4. No business sectors have seen growth in recent months.
5. Those who were laid off have been able to find other employment.

Thanks!
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Re: Critical reasoning assumption question

by Stuart@KaplanGMAT » Thu May 15, 2008 1:10 pm
nitya.oberoi wrote:Hi guys,

I have a question that I'm having a hard time understanding why the answer is what it is. Any help would be appreciated.

The downturn in the economy last year has prompted many companies to
make widely publicized layoffs, resulting in thousands of lost jobs.
Economists predicted that these layoffs would cause people generally to
cut back on their discretionary spending, even if their jobs were
secure, in anticipation of coming hard times. However, this prediction
has not come to pass, since there has been no increase in the amount of
money set aside by the general public in savings accounts.

Which one of the following is an assumption on which the argument
depends?

1. The economy has not improved in recent months.
2. There has been no increase in the amount of money invested in
stocks, certificates of deposit, or other savings vehicles.
3. Salaries have decreased as a result of the economic downturn.
4. No business sectors have seen growth in recent months.
5. Those who were laid off have been able to find other employment.

Thanks!
An assumption is something that must be true in order for the argument to make sense. In other words, an assumption is a missing but necessary piece of evidience - something that the author is taking for granted.

Let's summarize the argument in our own words (always a good idea on assumption/str/wkn questions):

Concl: people aren't cutting back on spending.

Evid: no extra money in savings accounts.

So, the author is basing the conclusion that people are spending just as much on the fact that they're not putting extra money into their savings accounts.

To reach that conclusion, the author must be assuming that there's no other evidence that people are spending less.

Our prediction: other measures of savings/spending less also haven't increased.

This prediction leads us directly to (2).

Another great tool to use if you're stuck is Kaplan's denial test. We look at the opposite of a choice and see what impact it has on the argument.

On assumption questions, the correct answer is an essential building block of the argument; therefore, the opposite of the correct answer will be a wrecking ball.

Denial of (2): it is not true that ... "There has been no increase in the amount of money invested in stocks, certificates of deposit, or other savings vehicles."

Eliminating the double negative:

"There has been an increase in the amount of money invested in
stocks, certificates of deposit, or other savings vehicles."

Well, if there's been an increase in other savings vehicles, then that's great evidence that spending HAS gone down, effectively refuting the author's conclusion.

Since the denial of (2) refutes the author's conclusion, (2) is a necessary assumption (and the correct answer).
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by wawatan » Thu May 15, 2008 1:35 pm
You have to be able to pick out the premise and the conclusion. the conclusion is usually an author's opinion. so in this problem the conclusion is
"However, this prediction
has not come to pass, since there has been no increase in the amount of
money set aside by the general public in savings accounts. " Also another tip to pick out the right assumption from the answer choices, make sure that the answer choice is closely related to the conclusion or the passage. Also eliminate choices that weaken the conclusion

1. The economy has not improved in recent months. (no mention of savings account and how that relates to the weakening economy)
2. There has been no increase in the amount of money invested in
stocks, certificates of deposit, or other savings vehicles. (good, save this)
3. Salaries have decreased as a result of the economic downturn. (out of scope, we cannot assume that salary decreased. the passage doesn't state that)
4. No business sectors have seen growth in recent months. (again, this answer choice is relates very closely to answer choice 1 but is incorrect)
5. Those who were laid off have been able to find other employment. (this actually weakens the conclusion, if they were laid off and been able to find employment, then the economy is not that weak, right? )

if you are struggling in critical reasoning, i suggest that you get a manhattan gmat critical reasoning book. i was a former student and this book helped me tremendously in answering critical reasoning questions. I hope this helps!
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by khanshainur » Tue May 10, 2016 7:31 am
I think option 2 is the better
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