Thanks for the question! So let’s walk through the stimulus first. We’re told that some of the most of the prosperous in the world will have experienced a pronounced drop in national savings rate, which is how much a household saves after its income is taxed. And then we’re told that since older people don’t have as many reasons to save money when compared to younger people, this trend will continue if the average of the population rises.
Now we’re asked to find an error in the reasoning leading to this above prediction. Well, here’s a potential error: the idea behind older people not saving as much money is based on them having fewer reasons to save. Fewer as in a smaller number of reasons. So if young people have 10 reasons, older people have 5. But what if the importance of those reasons is way higher? So maybe young people need to save to buy some nice fancy cheese, whereas older people are saving for their medical care at the end of their lives. Then older people still might save more, even though they have fewer reasons by number to save. And that’s what (D) gets at, which makes it the right answer.
Hope this helps! Feel free to ask any other questions that you might have.
andreaskormusisAugust 30, 2020
Makes sense thanks so much! How would you suggest determining that in the time it takes to answer one of these questions since it seems as though that requires a bit of thought? Like what would you suggest to speed up my thinking process?
