Economist: Some policymakers believe that our country's continued economic growth requires a higher level of personal...

shunhe on August 3, 2020

Hi @bingolawyer,

Thanks for the question! So let’s break down this argument. We have an economist telling us that some policymakers think that for economic growth, the country needs people to save more money. So there’s been this legislative proposal that would basically let people set up savings accounts that are tax free until you take money out. People who back it think that this will get more money to banks to loan to the government. But, the economist then says, this was tried in the past, and didn’t really work since the overall level of personal savings was left unchanged.

Now we’re being asked for how the author criticizes the proposed tax-incentive program. Well, the tax-incentive program is supposed to get people to save more, right? That’s a premise of the argument. But the author says actually no, that doesn’t happen, look at these historical examples. So the author is challenging that premise of the argument, which is a basis for the proposal. And so that’s why (A) is correct! When the author says that people won’t actually save more, that’s challenging a premise on which the proposal’s based.

Hope this helps! Feel free to ask any other questions that you might have.