Connsumers in California seeking personal loans have fewer banks to turn than do consumers elsewhere in the US. This shortage of competion among banks explains why interest rates on personal loans in California are higher than in any other region of the US.
Which of the following, if true, most substantially weakens the conclusion above?
A. Because of the comparatively high wayes they must pay to attract qualified workers, California banks charge depositors more than banks elsewhere do for many of the services they offer.
B. Personal loans are risker than other types of loans, such as home mortgage loans, that banks make.
C. Since bank deposits in California are covered by the same type of insurnance that guarentees bank deposit in other parts of the United States, they are no less secure than deposits elsewhere
D. The proportion of consumers who default on their personal loans is lower in California than in any other region of the US
E. Interest rates paid by California banks to depositors are lower than those paid by banks in other parts of the US because in California there is less competition to attract depositors
In the passage, does the shortage of competition among banks mean that there is no competition? I am a bit confused
prep question
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- jayhawk2001
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The claim is shortage of competition is the reason for the higherjc114 wrote:Connsumers in California seeking personal loans have fewer banks to turn than do consumers elsewhere in the US. This shortage of competion among banks explains why interest rates on personal loans in California are higher than in any other region of the US.
Which of the following, if true, most substantially weakens the conclusion above?
A. Because of the comparatively high wayes they must pay to attract qualified workers, California banks charge depositors more than banks elsewhere do for many of the services they offer.
B. Personal loans are risker than other types of loans, such as home mortgage loans, that banks make.
C. Since bank deposits in California are covered by the same type of insurnance that guarentees bank deposit in other parts of the United States, they are no less secure than deposits elsewhere
D. The proportion of consumers who default on their personal loans is lower in California than in any other region of the US
E. Interest rates paid by California banks to depositors are lower than those paid by banks in other parts of the US because in California there is less competition to attract depositors
In the passage, does the shortage of competition among banks mean that there is no competition? I am a bit confused
interest rates on loans
If we can provide an alternative reason for why interest rates are higher,
it would weaken the argument.
A does this by telling us that higher wages is the reason for the higher
interest rate.
B and C are out of scope
D does not weaken the argument. If the number of people defaulting
on loans is less, banks would love to give their money and there
might hence be a larger number of banks
E tells us something different i.e. interest paid to depositors - not
interest rates on loans
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