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Critical Reasoning: Inference Questions

Economist: The politician is trying to win over the hearts of the public by offering to lower taxes using money borrowed by the Federal Reserve from foreign banks. This is as sensible as borrowing money in the name of your children and giving it to them to convince them of your affluence.

The economist's statements, if true, best support which of the following as a conclusion?

Incorrect

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The question of an alternate path of action is not discussed and therefore, to conclude that money should be raised by issuing bonds is not a small step forward but rather a leap.

Remember, in Inference questions, your conclusion must only take a small step from the premises.

Incorrect.

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We are told nothing of the ratio between existing capital and borrowed money in either the Federal Reserve or the average household, so any conclusion in that direction is impossible.

Incorrect.

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We are told nothing of what the public will do with the money, so we can't conclude anything in that direction.

Way to go!

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The economists compares the politician's plan to a situation in which the children will have to pay for the money they received; this means the economist's conclusion is that the public will eventually have to pay for the money it received in tax relief. This money is the Federal Bank's debt to foreign banks.

Incorrect.

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The question of the stability of the American economy is not discussed and therefore, concluding that the proposed course of action may lead to the collapse of the American economy is not a small step forward but rather a giant leap.

Remember, in Inference questions, your conclusion must only take a small step from the premises.

The Federal Reserve is borrowing money that will not go to good use.
The ratio of debt to existing capital of the Federal Reserve is similar to the rate of debt to existing capital of the parents in a household.
The public will eventually have to pay for the debts of the Federal Bank.
The Federal Reserve should refrain from borrowing capital from foreign banks and raise resources, instead, from issuing bonds to the American public.
The continuing rise in the national debt may lead to the collapse of the American economy.