Q14 - Once consumers recognize that

[peg_city]

Why is B wrong?

Is it because of the second sentence "This increase can be readily explained by consumers desire not to postpone purchases...."?

Thanks

[tamwaiman]

(B) is incorrect because the lag between economic indicator of 1st signal and consumer' recognition is out of scope. What the argument concerns is during the protracted period of inflation.

[emilyruskin]

I am still confused as to why (D) is the best explanation.

How then could (D) be correct? (D) says prices will eventually fall, which explains why consumers would wait to buy things. This conflicts with the prompt however, where it says that consumers "continue to expect prices to rise" during protracted periods of inflation. How can they expect prices to fall and also anticipate them rise?

I'm so confused!

[maryadkins]

(B) is incorrect because the lag between economic indicator of 1st signal and consumer' recognition is out of scope. What the argument concerns is during the protracted period of inflation.

You're right that (B) is out of scope. Just to elaborate on that a bit, (B) introduces time before consumers have recognized inflation, but the entire stimulus is about what happens AFTER they've recognized it.

I am still confused as to why (D) is the best explanation.

You're right, it's not! The answer is (E).

(A) does not explain the discrepancy. Why do they spend a lot at first then?
(C) is weird. It tells us that no generalization is ever going to be true for every single person--well, okay, but why are consumers in general still behaving this way? We don't know.
(D) tells us what happens if consumers stop buying stuff, but it doesn't tell us why they stop--or why they buy a lot at first.
(E) works! They buy a lot before their purchasing power decreases, which happens if inflation lasts too long, in which case they can't buy stuff because their salaries aren't large enough to cover it.

[erpriyankabishnoi]

I have a problem understanding (d). Doesn't (d) suggest that consumers are not buying since if they stop buying they know that prices will fall and salaries will not get affected ...so that later they can buy more stuff with higher salaries and lower prices.

[maryadkins]

I have a problem understanding (d). Doesn't (d) suggest that consumers are not buying since if they stop buying they know that prices will fall and salaries will not get affected ...so that later they can buy more stuff with higher salaries and lower prices.

In (d), consumers are not buying because thy can't ("unable to make purchases"), not because of a motivation that's sophisticated about the future. It's a stretch at best to get where you got. Be really careful about doing this! Don't make it smarter than it it is. Stay literal.