Evaluate type...

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Evaluate type...

by [email protected] » Tue Jun 19, 2012 7:20 am
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.

The answer to which of the following questions would be most useful in evaluating the significance
of the savings patterns described above?

A] How much of their savings, on average, do laid-off employees deplete before finding new employment?

B] What has been the percent increase in the cost of necessities such as food, housing, and utilities during the period since the layoffs?

C] What percentage of people laid off have savings accounts?

D] What has been the average salary during the period since the layoffs?

E] What business sectors were most affected by the layoffs?



The given OA is B.

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by KapTeacherEli » Tue Jun 19, 2012 9:16 pm
This question asks us to evaluate the significance of a strange savings pattern. This falls a little outside the normal range of GMAT Critical Reasoning problems, but that just means we get to have a little fun figuring it out! Don't get distracted or intimidated when the GMAT throws you a curve ball.

In this case, the argument implies that the pattern might be significant because it stayed steady when we expected it to rise. Why did we expect it to increase? Well, layoffs and unemployment can scare people into savings.

But although layoffs and unemployment can affect savings, so can a whole lot of other things. Even though the question stem was unusual, the actual problem turns out to fit into a classic GMAT argument pattern: unexplored alternatives. In order to determine if the change in savings was truly a mystery of any "significance," we need to know whether any other factors could provide a perfectly mundane explanation. So, our prediction (remember to always predict!) is that the question will be whether or not some other major factor could explain changes in savings.

That leads us straight to (B), which matches perfectly. Note the language in the stem about "discretionary spending," and the reason this is correct becomes clear: if nondiscretionary spending is increasing, savings might stay stable even if discretionary spending is reduced. B is correct.
Eli Meyer
Kaplan GMAT Teacher
Cambridge, MA
www.kaptest.com/gmat

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