Concerned about financial well-being of its elderly citizens, the government of Runagia decided two years ago to increase by 20%...

GMAT Critical Reasoning : (CR) Questions

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Critical Reasoning

Logically Completes

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Concerned about financial well-being of its elderly citizens, the government of Runagia decided two years ago to increase by $20\%$ the government-provided pension paid to all Runagians over 65. Inflation in the intervening period has been negligible, and the increase has been duly received by all eligible Runagians. Nevertheless, many of them are no better off financially than they were before the increase, in large part because ________.

Which of the following most logically completes the passage?

They rely entirely on the government pension for their income

Runagian banks are so inefficient that it can take up to three weeks to cash a pension check

They buy goods whose prices tend to rise especially fast in times of inflation

The pension was increased when the number of elderly Runagians below the poverty level reached an all-time high

In Runagia children typically supplement the income of elderly parents, but only by enough to provide them with a comfortable living

Solution

Passage Analysis:

Text from Passage	Analysis
Concerned about financial well-being of its elderly citizens, the government of Runagia decided two years ago to increase by 20 percent the government-provided pension paid to all Runagians over 65.	What it says: Runagia's government boosted pensions by $20\%$ two years ago to help elderly citizens financially What it does: Sets up the government's action and their intention behind it What it is: Background information about government policy Visualization: Pension increase: $\$1,000/\mathrm{month} \rightarrow \$1,200/\mathrm{month}$ ($20\%$ boost)
Inflation in the intervening period has been negligible, and the increase has been duly received by all eligible Runagians.	What it says: No inflation happened, and everyone got their increased pension money What it does: Confirms the policy worked as intended - rules out inflation and delivery problems What it is: Factual confirmation of policy implementation Visualization: Inflation $\approx 0\%$, Pension delivery $= 100\%$ of eligible seniors
Nevertheless, many of them are no better off financially than they were before the increase, in large part because ______.	What it says: Despite getting more money with no inflation, many seniors aren't financially better off What it does: Creates a puzzle - contradicts what we'd expect from the pension increase What it is: Author's claim presenting an unexpected outcome that needs explanation Visualization: Expected: More money + No inflation = Better financial situation Reality: More money + No inflation = Same financial situation

Argument Flow:

"We start with the government's well-intentioned action (pension increase), then confirm everything went smoothly (no inflation, everyone got paid), but then hit a surprising contradiction - the seniors still aren't better off financially. This creates a puzzle that needs solving."

Main Conclusion:

"There's an unexplained reason why Runagia's seniors aren't financially better off despite receiving a $20\%$ pension increase with no inflation."

Logical Structure:

"This is a cause-and-effect puzzle. The premises establish that all the obvious factors point to seniors being better off (more money + no inflation + successful delivery), but the conclusion shows this didn't happen. We need to find the missing piece that explains this contradiction."

Prethinking:

Question type:

Logically Completes - We need to find what logically explains why elderly Runagians aren't financially better off despite receiving a $20\%$ pension increase with no inflation.

Precision of Claims

The key claims are precise: $20\%$ pension increase, negligible inflation, all eligible recipients received the increase, yet many are no better off financially. We need an explanation that accounts for this paradox.

Strategy

Since we have a paradox (more money + no inflation should = better financial situation, but it doesn't), we need to find scenarios that explain why the extra pension money didn't improve their financial well-being. We should look for factors that could offset or negate the benefit of the $20\%$ increase.

Answer Choices Explained

They rely entirely on the government pension for their income

This doesn't explain the paradox at all. If elderly Runagians rely entirely on government pensions and those pensions increased by $20\%$ with no inflation, they should definitely be better off financially. This choice actually makes the puzzle more confusing rather than solving it.

Runagian banks are so inefficient that it can take up to three weeks to cash a pension check

This is irrelevant because the passage explicitly states that 'the increase has been duly received by all eligible Runagians.' The banking efficiency issue doesn't explain why people who successfully received their increased pensions aren't better off financially.

They buy goods whose prices tend to rise especially fast in times of inflation

This doesn't work because the passage clearly states that 'inflation in the intervening period has been negligible.' If there's essentially no inflation, then the prices of goods they buy wouldn't be rising fast enough to offset a $20\%$ pension increase.

The pension was increased when the number of elderly Runagians below the poverty level reached an all-time high

This explains why the government decided to increase pensions (the motivation), but it doesn't explain why the elderly aren't better off after receiving the increase. The timing of the policy doesn't solve our financial puzzle.

In Runagia children typically supplement the income of elderly parents, but only by enough to provide them with a comfortable living

This is correct! Here's why it perfectly explains the paradox: If children were already topping up their parents' income to reach a specific comfort level, then when the government pension increased by $20\%$, the children would reduce their own contributions accordingly. The result? The elderly parents end up with the same total income ($\mathrm{higher\ pension} + \mathrm{lower\ family\ support} = \mathrm{same\ total}$), which explains why they're 'no better off financially' despite the pension increase.

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