LR Question 15 Explanation
QUESTION TEXT: During the recent economic downturn, banks contributed…
QUESTION TYPE: Necessary Assumption
CONCLUSION: Banks will lend more money if those standards are relaxed.
REASONING: Banks contributed to the downturn by loaning less money. And prior to the downturn, regulatory standards for banks were tightened.
ANALYSIS: This is a bad argument. It make a causation-correlation error. Just because one thing happened first (regulatory tightening) doesn’t mean that it caused another thing (loaning less money.)
It’s quite possible that the regulatory tightening hardly causes any change in loan policies. Banks may have simply been loaning less because they always loan less in hard times.
___________
- CORRECT. If the downturn caused a massive decrease in bank funds then banks might not have anything to lend even if regulatory standards are relaxed.
- Actually the argument seems to implying that the standards were a cause.
- The argument cares about the effects of the regulatory standards. The reasons for them are irrelevant.
- This assumption flatly contradicts the information in the stimulus. It can’t be true.
- Why would this assumption be necessary? The argument is stronger if relaxing the standards could cause so much loaning that the downturn was reversed.
More Resources for Necessary Assumption Questions
- Negations Article: Learn about negations on the LSAT.
- Conditional Reasoning Article: Learn about conditional statements.
- Negations Drill: Practice your negation skills.
- LR Diagrams Guide: Learn how to draw LR diagrams.
- Intro to Conditional Reasoning: Learn conditional reasoning basics.
- Intro Course lesson: This intro course lesson covers Necessary Assumption questions.
- Mastery Seminar lesson: This LR Mastery seminar lesson covers necessary assumption questions.
I’m failing to see how D contradicts the stimulus. It states normally there would be no dip in loans during a downturn. In this case, it is because of regulation not the banks, therefore wiping the regulation would bring back good loan values. The no statement only relates to the effects of an economic downturn and not the regulation itself, as it is not mentioned in the answer choice. I may be overthinking this.
Does the no statement also take regulation into regard in answer D? or is it considered a sort of separate issue?
I’m not entirely sure I’m following your line of reasoning. I’ll build on Graeme’s explanation. D contradicts the stimulus because it essentially says downturns are NEVER accompanied by a decrease in bank loans. The stimulus, however, tells us that banks contributed to the recent downturn by loaning less money. So the stimulus already shows us an example of exactly what D is saying never happens.
In terms of regulation, yes the stimulus says regulations are why bank loaned less money. But that’s just the reasoning. The outcome is still less loans, which still means D directly contradicts the statement that “banks contributed to the decline by loaning less money.” Hopefully that clarifies things, but let me know if you have any further questions!