Economist A: Banks Offer only Small Interest Rates for Money Being Stored in Savings Accounts.

Question: Economist A: Banks offer only small interest rates for money being stored in savings accounts. It is much better to create an investment portfolio with a financial management company in order to take advantage of money that has been put aside.

Economist B: Investments require speculation. I advise that at the moment, storing money in a bank savings account is the wise thing to do.

Which of the following, if true, most weakens economist A's advice?

(A) Maintaining a bank savings account requires the payment of handling fees which can be costly, depending on the bank.
(B) Investment portfolios are designed to maximize profits while reducing the risk to a minimum by dividing the investments to cover a variety of markets.
(C) A recent economic crisis led to the closing of several banks and to the subsequent loss of a great deal of the customers' savings.
(D) Owners of savings accounts in banks are only allowed to withdraw their money on certain dates decided upon when the account was created.
(E) A financial statistics report shows that 97% of all investment portfolios created in the last 3 years hold losses on their initial investments.

“Economist A: Banks offer only small interest rates for money being stored in savings accounts.” – this is a GMAT Critical question. This particular GMAT Critical Reasoning topic has been taken from the book ‘501 GMAT Questions’. In this particular topic, candidates need to choose the option that best suits the passage. GMAT critical reasoning tests the logical and analytical skills of the candidates. Critical reasoning in GMAT requires candidates to find the strengths and weaknesses of the argument, or find the logical flaw in the argument. The GMAT CR section contains 10 -13 GMAT critical reasoning questions out of 36 GMAT verbal questions.

Answer: E
Explanation: Question Type: Weakening GMAT CR type question. We can answer this GMAT critical reasoning question by either finding a piece of evidence that would weaken the argument or logical flaws in the argument.

Argument Evaluation:

Option A: Incorrect.

This statement weakens Economist B's hypothesis, which states about bank savings accounts. Hence, it indirectly supports Economist A's claim. Additionally, it highlights the costs of having a savings account. So, Economist A's claim is weakened. Therefore option A is the correct answer.

Option B: Incorrect.

This statement supports Economist A's claim, but we need to weaken it. So, investment portfolios reduce the risk and maximize profits. Hence option B is incorrect.

Option C: Incorrect.

This statement directly weakens Economist B's response by implying an actual case about a customer losing money in banks. Hence, they promote investing money.

Option D: Incorrect.

This statement weakens Economist B's consent for bank savings accounts. It supports Economist A's claim. This shows a disadvantage of having a savings account. We had to show that Economist A's claim is weak, so this is not required.

Option E: Correct.

This statement implies information that directly weakens Economist A's viewpoint. It reveals that the great majority of people who believe in investments have lost money in the last 3 years. Hence, it weakens Economist A's claim. Therefore, option E is the correct answer.

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