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- Wed Jan 21, 2015 12:00 am
#35197
Complete Question Explanation
Main Point—FIB. The correct answer choice is (D)
Here, the economist discusses which tax system would be better for certain countries. Currently,
these governments fund their expenditures by taxing income. However, the economist points out,
taxing incomes does not promote savings and investment, although taxing consumption would
encourage savings. Based on the claim that the only way to improve their economies is to increase
their savings rates, and based on the assertion that improving their economies is the most important
challenge facing these countries, the author reaches a conclusion.
However, the stimulus does not provide the conclusion. In its place is a blank line. This is a Main
Point—Fill in the Blank question. We are to select the answer choice that best expresses the
economist’s main point. Our prephrase is that the economist concludes that these countries should
begin to tax consumption, rather than income, because doing so will encourage increased savings,
and an increased savings rate is required for the countries to improve their economies.
Answer choice (A): There is no indication from the stimulus that the governments are taxing savings
and investment. What the economist would say is that the countries should stop taxing incomes, and
instead tax consumption.
Answer choice (B): This answer choice is an exaggeration of the economist’s argument. Although an
increased savings rate is required for these economies to improve, the stimulus does not support the
conclusion that increasing savings rates will cause rapid improvement.
Answer choice (C): As with answer choice (B), this is an exaggeration on the economist’s view of a
consumption-based tax. The tax on consumption would increase savings rates, which is required for
the economies to improve, which would bring in more resources to fund government expenditures.
However, increased savings rates are not sufficient for improvement.
Answer choice (D): This is the correct answer choice, because it reflects the economist’s view that
the countries should shift from taxing incomes to taxing consumption, but does not exaggerate the
economist’s view or introduce other facts not discussed by the economist.
Answer choice (E): Although we know that the economist thinks the countries at issue in this
stimulus should change from an income-based tax to a consumption-based tax, the economist did not
discuss what is helpful and detrimental to the economies of all countries.
Main Point—FIB. The correct answer choice is (D)
Here, the economist discusses which tax system would be better for certain countries. Currently,
these governments fund their expenditures by taxing income. However, the economist points out,
taxing incomes does not promote savings and investment, although taxing consumption would
encourage savings. Based on the claim that the only way to improve their economies is to increase
their savings rates, and based on the assertion that improving their economies is the most important
challenge facing these countries, the author reaches a conclusion.
However, the stimulus does not provide the conclusion. In its place is a blank line. This is a Main
Point—Fill in the Blank question. We are to select the answer choice that best expresses the
economist’s main point. Our prephrase is that the economist concludes that these countries should
begin to tax consumption, rather than income, because doing so will encourage increased savings,
and an increased savings rate is required for the countries to improve their economies.
Answer choice (A): There is no indication from the stimulus that the governments are taxing savings
and investment. What the economist would say is that the countries should stop taxing incomes, and
instead tax consumption.
Answer choice (B): This answer choice is an exaggeration of the economist’s argument. Although an
increased savings rate is required for these economies to improve, the stimulus does not support the
conclusion that increasing savings rates will cause rapid improvement.
Answer choice (C): As with answer choice (B), this is an exaggeration on the economist’s view of a
consumption-based tax. The tax on consumption would increase savings rates, which is required for
the economies to improve, which would bring in more resources to fund government expenditures.
However, increased savings rates are not sufficient for improvement.
Answer choice (D): This is the correct answer choice, because it reflects the economist’s view that
the countries should shift from taxing incomes to taxing consumption, but does not exaggerate the
economist’s view or introduce other facts not discussed by the economist.
Answer choice (E): Although we know that the economist thinks the countries at issue in this
stimulus should change from an income-based tax to a consumption-based tax, the economist did not
discuss what is helpful and detrimental to the economies of all countries.
savings.)