Twelve years ago and again five years ago, there were extended periods when 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 the 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 the politican's recommendation, if followed, will achieve its aim?

a) several of the politicians no 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 its peak capcity, 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 currently all have stable currencies

e) a sharp improvement in the efficiency of darfir's manufacturing plants would make darfir's products a bargain on the world markets even without weakening of the pundra relative to other currencies.

please explain the answer choices and why the right answer is correct....thank you!

In order to weaken Politician recommendation The answer should be "b) after several decades of operating well below its peak capcity, darfir's manufacturing sector is now operating at near-peak levels".
The reason for this choice is as even if the currency is further devalued as manufacturing sector is now operating at near-peak levels, it is not going to increase further production of goods and another similarly sized increase in exports will not be possible as supply will be limited/restricted due to the same.


What is the OA?

agreed.

notice the following:
- (a) is irrelevant (politicians' stances / opinions don't have a direct bearing on any of the economic indicators in the argument)
- we can't evaluate the effects of (c) until we know whether the purported rise in exports will be 'significant' (circular reasoning - we can't base advocacy for/against a policy on its uncertain results)
- (d) irrelevant, as there's no material difference between this situation and the situation during the first two export booms: notice that, in those cases, the reference currencies were all stable as well
- (e) irrelevant: the question asks us to undermine the politician's suggestion, not to suggest an alternative. (analogy: if you think that eating only big macs will help you lose weight, i can't convince you otherwise by suggesting alternate diets)

RON sir E is an alternate and with the present language of the argument is irrelevant. what if the laste sentence had been:

Now some politicians are saying that, in order to cause another similarly sized increase in exports, the only way is that the government should allow the pundra to become weak again.
which would be better B or E

Hi Ron,

Can you elaborate on the below ?

we can't evaluate the effects of (c) until we know whether the purported rise in exports will be 'significant' (circular reasoning - we can't base advocacy for/against a policy on its uncertain results)

Chetan.

i must say i instinctively went for E, but after reading the question properly i select B..my reason being


Lets try to relate the lower value of currency to production levels, production levels were below peak, hence expenditures incurred by manufacturers were not as high as they would be at peak capacity, therefore they were able to sell their goods to the export market at reasonable prices(or agreeable prices inspite of the drop in currency)...

But now they are operating at near full capacity, this means that their operating costs are higher compared to previous decade, which means that if the rate of currency is dropped (bringing it down to levels that were existing at the previous drop), the manufacturers would have to increase the price of their goods to sustain their own costs / profits, and this might not be a favourable scenario in the export market as the goods might be too expensive to buy in the export market.

anyone has any other explanation.

here's an even stronger reason to eliminate choice (c):
the recommendation's aim is to cause a rise in exports.
choice c is concerned with the effects of a rise in exports, and really has nothing to do with the cause of that rise. therefore, we can't tell whether it will have anything to do with the original aim of the recommendation.

still b; the new and improved (e) would still have the following 2 problems:
* it just describes what politicians are saying, rather than producing any real evidence;
* it just echoes what the original politician is already saying (it doesn't add anything at all to the already existing argument)

I got this question wrong and read your explanations and am still not convinced.

FACTS
In 1996 and 2003 the Darfir's currency was weak compared to the world's currencies
During these times, other countries purchased a lot more manufactured products from Darfir because they received a great bargain.

CONCLUSION
If the government makes the currency weak again, other countries will purchase the manufactured products as they did in '96 and '03

ASSUMPTION
The politicians believe that other countries will jump at the opportunity to buy Darfir's products at a bargain price.
The politicians assume that the government has the ability to lower the value of the currency
The politician assume the high sales in '96 and '03 were an effect of the strength of the currency in those years.

So, as the question asks...

Which answer choice, if true, would make the government believe that lowering the currency will NOT cause a surge in Darfir's exports?


B) After several decades of operating well below its peak capacity, Darfir's manufacturing sector is now operating at near-peak levels

How does the knowledge that for (20,30,40+) years the manufacturing output was low and now its high make the gov't think that lowering the currency won't help move manufactured goods? This answer choice is so flimsy and cannot be properly tied to the question stem without applying several unfactual assumptions. There is a strong correlation between the currency dropping and demand for exports. Now that you have an even larger supply of exports then ever before, dropping the value of the currency will attract foreign countries and almost guarantee that the politicians goal of seeing a "similarly sized increase in exports". I think it can be argued that this answer is actually a strengthener for the politicians argument.

E) A sharp improvement in the efficiency of Darfir's manufacturing plants would make Darfir's products a bargain on the world markets even without weakening of the pundra relative to other currencies.

This answer choice says that if you fix some things up around the manufacturing plants, it will lead to an effect that the politicians desire (increased sales) without implementing their suggestion of a making the currency weaker. If it is true that improving the plant's efficiency will give you the same results that lowering the currency may or may not give you, then the government would doubt that lowering the currency will help move exported products because they now know for a fact what will achieve the goal.


HELP!!!

whoa there. you're using very faulty logic here.
basically, what you've written boils down to this: if i think X will have a certain effect, but it turns out that Y will have that effect, then i should doubt that X will have that effect after all.
analogy:
let's say you've lost weight a few times in the past by exercising, and so i say that you should exercise again (X) if you want to lose weight again (the desired effect). but now let's say you have a magic pill (Y) that will cause weight loss.
clearly this doesn't mean that exercise should no longer be considered as an option; in fact, it doesn't affect the consideration of exercise at all. it is totally irrelevant.

back to the pundra:
the argument in this problem is concerned only with whether weakening the pundra will have a certain effect. it doesn't matter if you can put forward other ways to achieve the same effect, for the same reason the magic pill has no bearing on the question of whether exercising will cause weight loss.

nope. you're missing the important part here: the phrase near-peak.
this means that the manufacturing sector can't increase output by very much at all (this is what 'peak output' means).
if the manufacturing sector can't meaningfully increase output, then it won't be able to produce a big increase in exports, because there won't be any extra stuff to export.

OA is supposed to be B. But I have some reservations on this. I read through all the postings but I believe an important aspect has been missed here. Choice B says
'after several decades of operating well below its peak capcity, darfir's manufacturing sector is now operating at near-peak levels'.
How can we assume that just because production has peaked, demand for the goods has also peaked ? It could be extremely possible that production has peaked but domestic demand is well below production levels and that sufficient surplus is available for export purposes. This would also be a valid reason for the government to want to boost exports.
Infact high inventory is a common problem faced by all major manufacturing companies today !!!

Any thoughts on this ?

you can't introduce some random hypothetical consideration, which may or may not be true (and has zero evidence in the passage), and then try to criticize it as if it were a necessary consequence of the argument!
you should know better than this; making any unwarranted assumptions on CR is disastrous - let alone using those unwarranted assumptions as the basis for further reasoning.
this is one form of a common logical fallacy called ignoratio elenchi, if you're interested in such things.

Ron, my main point was this :
How can we assume that just because production has peaked, demand for the goods has also peaked ?
Granted, the rest of the argument that I made is hypothetical.



But the nature of the question is such that it asks you to assume (one at a time) each choice to be true, to make all possible logical hypotheses and start playing devil's advocate to pick the right answer.

But if you think that the hypothesis that I made is far fetched, let me assure you, it is not. I work for a supply chain management company and I can assure you, customers pay us millions of dollars to tell them when to stop producing so that they don't have increasing inventories, with no demand to be met. This is a very real problem that the top corporations of today face. And I would expect a test that plays a significant role in selecting future business leaders to expect test takers to be able to think on these lines.

I still stand by what I said and we shall probably agree to disagree.

btw, nice trivia on 'ignoratio elenchi' :)