PT 10, Sec.1 Question 14 (LR)

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gdane
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PT 10, Sec.1 Question 14 (LR)

Postby gdane » Sat Aug 07, 2010 1:19 pm

How is (E) correct if the last sentence in the stimulus very specifically says that it is a fact that salaries rise during inflationary periods?

If anyone can explain this to me Id really appreciate it.

Thanks!

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Addicted to LSAT
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Re: PT 10, Sec.1 Question 14 (LR)

Postby Addicted to LSAT » Sat Aug 07, 2010 2:11 pm

(E) says "...salaries do not keep pace with prices" so while yes salaries are still rising during inflationary periods as said in the stimulus, they do not rise as quickly as prices. Meaning your purchasing power decreases. So whereas before inflation, a week's groceries might have cost 5% of your weekly pay check, now it might cost 6%, even though your salary increased. This explains why consumers eventually begin to put off even routine purchases.

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gdane
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Re: PT 10, Sec.1 Question 14 (LR)

Postby gdane » Sat Aug 07, 2010 3:18 pm

OH!!!! So even though salaries do rise, they do not rise enough. (E) is not saying that salaries dont rise, its just saying that they dont rise enough to keep pace with inflation and hence thats why consumers would not spend as much.

Got it!

Thanks you so much!




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