QUESTION TEXT: The widespread staff reductions in a certain…
QUESTION TYPE: Necessary Assumption
CONCLUSION: Workers are still spending as much as before.
REASONING: Workers aren’t putting more money in savings accounts.
ANALYSIS: This is a bad argument. The workers might have put their money in bonds, or stocks, or they might even have stuffed it under their mattresses.
The argument has to assume that saving in a bank is the only alternative to spending.
___________
- CORRECT. This is one necessary assumption among many. Paying off debts faster is an alternative both to spending and to saving in a bank. The argument is assuming that workers didn’t choose this option.
- Actually, the argument is assuming that workers aren’t helping their relatives. Giving money to relatives is an alternative to spending or to saving in a bank.
- Actually, the argument would be stronger if the new jobs paid just as well. If workers have less money, then that is an alternate explanation for why they’re not saving more.
- It’s not clear whether pessimism would make people save more (because they won’t get extra money in the future) or save less (because they have given up all hope).
Since we don’t know what effect pessimism has, it’s impossible to evaluate this answer.
- Why would accurate statistics weaken the argument? They might prove the author correct.
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