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Darfir Republic's currency- The Pundra

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by veenu08 » Thu Aug 15, 2013 12:18 am
Twelve years ago and again five years ago, there were extended periods when the Darfir Republic's currency, the pundra, was weak: its value was unusually low relative to the world's most stable currencies. Both times a weak pundra made Darfir's manufactured products a bargain on world markets, and Darfir's exports were up substantially. Now some politicians are saying that, in order to cause another similarly sized increase in exports, the government should allow the pundra to become weak again.

Which of the following, if true, provides the government with the strongest grounds to doubt that the politicians' recommendation, if followed, will achieve its aim?

(A) Several of the politicians now recommending that the pundra be allowed to become weak made that same recommendation before each of the last two periods of currency weakness.
(B) After several decades of operating well below peak capacity, Darfir's manufacturing sector is now operating at near-peak levels.
(C) The economy of a country experiencing a rise in exports will become healthier only if the country's currency is strong or the rise in exports is significant.
(D) Those countries whose manufactured products compete with Darfir's on the world market all currently have stable currencies.
(E) A sharp improvement in the efficiency of Darfir's manufacturing plants would make Darfir's products a bargain on world markets even without any weakening of the pundra relative to other currencies.[
Can someone please explain me how E is incorrect?

Isnt it of the form cause and effect.

As per the argument -- weakening of pundra causes Darfir's manufactured exports to rise. In E option its giving another cause for the same effect. So cant it weaken the argument?
Regards,
Veenu
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Source: — Critical Reasoning |

by macattack » Thu Aug 15, 2013 3:57 am
Premise: Both times a weak pundra made Darfir's manufactured products a bargain on world markets, and Darfir's exports were up substantially.
Conclusion: In order to cause another similarly sized increase in exports, the government should allow the pundra to become weak again.

This CR question is a Weaken type question. We should be looking for a piece of evidence that would weaken our conclusion. That said we should find the evidence that would make the positive correlation between weak currency and high exports untrue.

The answer to that question is [spoiler](B) After several decades of operating well below peak capacity, Darfir's manufacturing sector is now operating at near-peak levels[/spoiler] If the manufacturing plants are currently operating at peak capacity then we can conclude the following: Weaker currency--->Higher demand for exports...however this high demand cant be supplied or serviced since manufacturing plants are operating at peak capacity, hence the exports levels will not rise---->the conclusion is weakened.

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by [email protected] » Thu Aug 15, 2013 2:30 pm
Hi veenu08,

I understand why you were tempted by Answer E, but it doesn't do what the question asked. We're looking for something that will essentially prove that the politician's plan WON'T WORK, so we need to address the ideas behind the plan:

Weak currency ---> increased exports = Darfir needs to be able to produce the exports necessary to fill the increased demand.

Answer E states another way to potentially increase exports, but THAT point doesn't make the politician wrong.

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Rich
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by Java_85 » Thu Aug 15, 2013 4:43 pm
I think B is the right answer.

E is adding more info to the passage knowledge. So it's not right!
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