This is a MGMAT CAT CR question.
Although I have seen the official answer and explanation, I am NOT satisfied with that.

Here is what I think:
IMO answer should be 'A'
Option (a) provides a solid proof of the example author gave about people's earning but still flagged under poverty category.
Option (c) If Option (a) is what I think, option (c) is not that important.
Option (e) merely restates the part of the argument

Could the Tutors please explain these points versus the official answer/explanation? This is rather URGENT.

Question:
The United States government uses only a household's cash income before taxes to determine whether that household falls below the poverty line in a given year; capital gains, non-cash government benefits, and tax credits are not included. However, yearly cash income is not a fool-proof measure of a given household's disposable income. For example, retirees who live off of capital gains from an extensive portfolio could earn hundreds of thousands of dollars, yet be classified by the government as living in "poverty" because this income is not included in the calculation.

Which of the following, if true, validates the contention that the government's calculation methods must be altered in order to provide statistics that measure true poverty?

(a) For more than 99% of those classified as living in poverty, yearly cash income comprises the vast majority of each household's disposable income.
(b) While the government’s calculation method indicated a 12.5% poverty rate in 2003, the same calculation method indicated anywhere from a 9% to a 16% poverty rate during the preceding decade.
(c) Most established research studies conducted by the private sector indicate that the number of people truly living in poverty in the U.S. is less than that indicated by the government’s calculation method.
(d) Several prominent economists endorse an alternate calculation method which incorporates all income, not just cash income, and adjusts for taxes paid and other core expenses.
e) The government’s calculation method also erroneously counts those who do not earn income in a given year but who have substantial assets on which to live during that year.

Cheers
JTG[/i]

Given what you said in your explanation, I think you might be reading something incorrectly, either in the question or in the answer choice.

The argument says that the government DOES currently measure poverty level based upon cash income. The author of the argument then says that this method is flawed b/c there could be people who are classified at poverty level due to very little cash income, yet they could have substantial income from other sources.

The question asks us to find a choice that demonstrates that the government's current method is, in fact, flawed and needs to be fixed.

Answer A says that, for more than 99% of people classified at poverty level, cash income really does comprise the "vast majority" of that household's disposable income. This supports the government's current method - the vast, vast majority of people fit the current way of calculating poverty level. It doesn't support the argument's contention that the "cash income" method is flawed and should be changed.

You explain A by saying "provides a solid proof of the example author gave about people's earning but still flagged under poverty category." This leads me to think you're interpreting A to mean that these are the people who are being flagged at poverty level who shouldn't be b/c they have other sources of income - but that's not the group that this choice describes. This choice describes the group that, according to the government's current method, really should be flagged at poverty level.

Stacey,

Thanks for your detailed response. Though I still have one nagging question about the premise and option A. Here it is:

your response quoted:
You explain A by saying "provides a solid proof of the example author gave about people's earning but still flagged under poverty category." This leads me to think you're interpreting A to mean that these are the people who are being flagged at poverty level who shouldn't be b/c they have other sources of income - but that's not the group that this choice describes. This choice describes the group that, according to the government's current method, really should be flagged at poverty level.

Premise:
However, yearly cash income is not a fool-proof measure of a given household's disposable income. For example, retirees who live off of capital gains from an extensive portfolio could earn hundreds of thousands of dollars, yet be classified by the government as living in "poverty" because this income is not included in the calculation.


Here in the example given in the stem, retirees living off capital gains from... yet be classified by the govt as living in poverty because their income is not included in calculation.
Doesn't this mean that the Capital gains may fall under the 'yearly income'? And, their household income falls in the "below poverty" category. Consequently, the retirees would fall in the 99% "below poverty" category?

Whereas, your assumption in that 'A' suggests that the govt. calculations reflect set of people whose household income genuinely fall in the 99% "below poverty" category. There is no keyword to suggest, that I have noticed, this assumption to be so.

Apologies, if it may sound repetitive in some places!
Please reconfirm ?
:idea:

Merry Christmas and a happy new year!

cheers
JTG :D

Nope. That's the opposite of what it's saying. The "could" refers to how much they earn - they "could earn" $2 or they "could earn" $200,000. The clause "this income is not included in the calculation" later in the sentence is a statement of fact - not that the income could be (or may not be) included in the calculation. Rather, capital gains are NOT included in "yearly cash income."


Technically, A doesn't assume that they "genuinely" fall into anything - you have to define what you mean by "below poverty." In this case, the government defines "below poverty" as making below a certain amount in yearly cash income. So 100% of the people the government places in that category have been rated based upon their yearly cash income. If that yearly cash income really is the primary source of income for 99% of that 100%, then it looks like the government is measuring the category accurately according to its own definition.

The main point of the argument is simply a claim that the government has defined something, but then calculates that something in a bad way such that you don't actually get accurate data according to that definition. Answer A indicates that the government's calculations are pretty accurate for the definition it set.

I know this one's a tough one. Happy holidays to you too!