The federal funds rate (FFR) is the rate of interest -

[saxenashobhit]

The federal funds rate (FFR) is the rate of interest at which the United States Federal Reserve lends money to U.S. banks and other depository institutions. The FFR was recently lowered, and banks began to loan money at very low interest rates, resulting in an abnormally high level of domestic consumer and commercial debt. The Federal Reserve has announced that it will gradually increase the FFR to its previous level. As the FFR increases, domestic consumer and commercial interest rates and debt will return to their previous levels.

Which of the following, if true, casts the most doubt on the prediction above?

A)Mortgage rates often change in anticipation of changes to the FFR.

B)Easy and inexpensive access to capital allowed many businesses to increase capacity, leading to lower levels of unemployment.

C)According to standard monetary policy, a low FFR can soften the effects of a recession.

D)Instability in international capital markets, which drives money into the United States and lowers interest rates, is likely to increase in the near future.

E)The government is already considering placing stricter legal limits on lending practices.

E is wrong - I am not sure of OA

[sanabk]

D

[tzohrabyan]

Here you should analyze the conclusion: FFR increase will return the domesstic consumer and commercial interest rates and debt to their previous levels, which from the passage (premises) you can conclude that it will decrease (because it mentioned that abnormally high level of domestic consumer and commercial debt resulted the recent drop in FFR).
So, which one will weaken the conclusion?
A. This is oppostie answer because it even strengthens the argument - MR which is another type of interest rate will increase or decrease if they predict the FFR changes. So, you can conclude that if FFR increases, then the MR will increase in anticipation as well.
B. Doesn't really weaken the argument - just introduces a "new" info, but even this info doesn't really contradict the prediction. The first part simply restates the fact previously introduced in the passage.
C. Weather it can soften the effect or not, it is not directly linked to conclusion which says that FFR will either increase or decrease the debt level.
D. This means that if FFR increases and there is no impact from international markets, then the prediction that debt level will return will hold. However, this answer choice actuallly states that capital markets overseas can actually reverse or weaken this intended impact of higher FFR, hence cast doubts that the prediction will hold true. Thus it is the correct answer choice.
E. This actually strengthens the prediction - It says gov will do all to make sure the predicted outcomes will be observed.
Hope it helped.

[nguy]

TIME: 1:30
IMO D

Conclusion: "domestic consumer and commercial interest rates and debt will return to their previous levels," so we are looking for reason why interest rates will remain low or debt will not reduce.

A)Not sure so kept it for second check.

B)unemployment is OOS

C)recession OOS

D) BANG!!! gives a reason, why the situation will not improve. Keep it.

E)Strict lending practices is OOS.

Finally, A is just giving a fact and not a reason. Also, D is way too strong when compared to A.