Economist: In Nation X, the number of unsold homes on the market recently reached a twenty-year high. The last time...

GMAT Critical Reasoning : (CR) Questions

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Critical Reasoning

Misc.

HARD

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Economist: In Nation X, the number of unsold homes on the market recently reached a twenty-year high. The last time the number of unsold homes was that high, a severe economic recession soon followed. Therefore, the nation's economy is almost certainly about to suffer another severe recession.

The economist's reasoning is most vulnerable to criticism on which of the following grounds?

It confuses a claim about the number of unsold homes on the market with a more general claim about an overall economic recession.

It overlooks the possibility that even if one phenomenon causally contributes to another, the latter sometimes, but not always, causally contributes to the former.

It overlooks the possibility that other severe economic recessions in Nation X may have occurred when there were not an unusually large number of unsold homes on the market.

It fails to address adequately the possibility that one phenomenon may closely follow another by coincidence.

It fails to address adequately the possibility that a severe economic recession may itself cause more homes to remain on the market unsold.

Solution

Passage Analysis:

Text from Passage	Analysis
In Nation X, the number of unsold homes on the market recently reached a twenty-year high.	What it says: Nation X currently has more unsold homes than at any point in the last 20 years What it does: Sets up the current market situation as the starting point What it is: Factual observation about current housing market Visualization: 2024: 50,000 unsold homes vs. Previous 20 years: never exceeded 45,000
The last time the number of unsold homes was that high, a severe economic recession soon followed.	What it says: When unsold homes hit this level before, a bad recession happened afterward What it does: Connects the current situation to a historical pattern with negative outcomes What it is: Historical comparison/precedent Visualization: 2004: 50,000 unsold homes → 2005: Severe recession
Therefore, the nation's economy is almost certainly about to suffer another severe recession.	What it says: Based on the pattern, Nation X will definitely experience a severe recession soon What it does: Draws a strong conclusion by assuming the historical pattern will repeat What it is: Author's main conclusion Visualization: 2024: 50,000 unsold homes → 2025: Severe recession (predicted)

Argument Flow:

The economist starts with a current fact (unsold homes at 20-year high), then provides historical context (last time this happened, recession followed), and concludes that history will repeat itself (recession is coming).

Main Conclusion:

Nation X's economy is almost certainly about to suffer another severe recession.

Logical Structure:

This is a pattern-based argument that assumes past correlation equals future causation. The economist sees unsold homes → recession happened once before, so unsold homes → recession will happen again. The link relies entirely on this single historical precedent repeating.

Prethinking:

Question type:

Misc - This is asking us to identify the flaw in the economist's reasoning. We need to spot what makes this argument weak or vulnerable to attack.

Precision of Claims

The economist makes a very strong claim ('almost certainly') based on a single historical precedent. The argument assumes that one past correlation will definitely repeat.

Strategy

For flaw questions, we need to identify what's wrong with the logical structure. The economist sees that unsold homes hit a 20-year high, remembers this happened once before and was followed by recession, then concludes it will definitely happen again. We should look for classic reasoning errors like small sample size, assuming correlation equals causation, or ignoring other possible factors.

Answer Choices Explained

It confuses a claim about the number of unsold homes on the market with a more general claim about an overall economic recession.

This choice suggests the argument confuses specific claims about unsold homes with general claims about recession. However, the economist isn't confusing these concepts - they're clearly distinguishing between the housing market indicator and the economic outcome. The economist properly treats unsold homes as a potential predictor of recession, not as recession itself. This mischaracterizes the argument's structure.

It overlooks the possibility that even if one phenomenon causally contributes to another, the latter sometimes, but not always, causally contributes to the former.

This choice discusses bidirectional causation - whether recession might also cause unsold homes. But the economist's argument only goes in one direction (homes → recession) and doesn't claim the reverse. The economist isn't making any claims about recession causing unsold homes, so this bidirectional causation issue isn't relevant to the argument's weakness.

It overlooks the possibility that other severe economic recessions in Nation X may have occurred when there were not an unusually large number of unsold homes on the market.

This choice suggests the flaw is ignoring other recessions that occurred without high unsold homes. However, this doesn't address the core problem. Even if other recessions happened without this housing pattern, the economist could still validly argue that high unsold homes reliably predict recession. The argument's weakness isn't about missing other recession causes.

It fails to address adequately the possibility that one phenomenon may closely follow another by coincidence.

This correctly identifies the central flaw. The economist sees that high unsold homes were followed by recession once before and concludes this pattern will definitely repeat. The argument fails to consider that this single historical correlation might have been coincidental rather than causal. Just because two events occurred in sequence once doesn't mean one caused the other or that the pattern is reliable for future predictions.

It fails to address adequately the possibility that a severe economic recession may itself cause more homes to remain on the market unsold.

This choice suggests the flaw is not considering that recession might cause unsold homes rather than the reverse. However, this causation direction issue isn't the main problem. Even if recession does cause unsold homes, the economist's argument about the predictive relationship could still be valid. The core flaw is assuming one correlation guarantees future repetition.

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