Critical Reasoning
Verbal Ability

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In the country of Russia, the past two years'   broad   economic recession has included a business downturn in clothing trade, where sales are down by about 7 percent as compared to two years ago. Clothing wholesalers have found, however, that the proportion of credit extended to retailers that was paid off on time fell sharply in the first year of the recession but returned to its prerecession level in the second year.

Which of the following, if true, most helps to explain the change between the first and the second year of recession in the proportion of credit not paid off on time?


The total amount of credit extended to retailers by clothing wholesalers increased between the first year of the recession and the second year.


Between the first and second years of the recession, clothing retailers in Russia saw many of their costs, rent and utilities in particular, increase.


Of the considerable number of clothing retailers in Russia who were having financial difficulties before the start of the recession, virtually all were forced to go out of business during its first year.


Clothing retailers in Russia attempted to stimulate sales in the second year of the recession by discounting merchandise.


Relatively recession-proof segments of the clothing trade, such as work clothes, did not suffer any decrease in sales during the first year of the recession.

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Option(C) is correct

Option A : The fact that the absolute amount ofcredit that was extended to retailers went up in the second year does not help to explain why the proportion that was paid on time also went up.

Option B : If anything, this would suggest that more retailers would have trouble paying their credit to wholesalers on time.

Option C : Correct. This is the option that most helps to explain the phenomenon.

Option D : Just because retailers tried tostimulate sales does notmean that they succeeded, and the passage
tells us that the downturn in sales in the clothing trade continued into thesecond year.

Option E : This does not change the fact that there was a downturn in sales of clothing during the first year.
Furthermore, the question is why the rate of unpaid credit dropped in the second year of the recession.

The correct answer is C.

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