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Difficulty: Very hardNecessary Assumption

Economist: To mitigate the economic stagnation caused by our aging workforce, the government recently introduced aggressive tax incentives for corporations that invest in automation technology. Proponents argue this will elevate overall industrial productivity. However, these incentives will actually exacerbate the current economic stagnation. To take advantage of these incentives, corporations will inevitably fund their automation investments by diverting capital away from employee training programs, which are currently the sole driver of productivity growth in our remaining workforce.

Which one of the following is an assumption on which the economist's argument depends?

  1. A
    A reduction in funding for employee training programs will lead to a severe decline in the current baseline productivity of the remaining workforce.
  2. B
    Employee training programs are the only initiatives capable of mitigating the economic effects of an aging workforce.
  3. The productivity gains achieved through the implemented automation technology will not fully offset the productivity growth lost by defunding employee training programs.Answer
  4. D
    The newly implemented automation technology cannot operate at maximum efficiency if the remaining workforce is deprived of ongoing training.
  5. E
    The economic stagnation caused by the aging workforce directly caused the government to overvalue the potential benefits of automation technology.

Answer

The productivity gains achieved through the implemented automation technology will not fully offset the productivity growth lost by defunding employee training programs.
The argument concludes that the tax incentives will exacerbate economic stagnation because corporations will divert funds from training (the sole driver of productivity growth) to automation. For this sequence of events to exacerbate stagnation, the new automation must not produce enough productivity to make up for the lost training. If the automation's productivity gains did fully offset the loss from training (the negation of the correct answer), overall productivity would not decrease, and stagnation would not be exacerbated. Therefore, this assumption is logically necessary.

Step-by-Step Solution

1
Analyze the core argument structure.
Premise: Corporations will divert funds from training (the sole driver of productivity growth) to automation. Conclusion: The tax incentives will exacerbate economic stagnation.
Identifying the premises and main conclusion is required to locate the logical gap.
2
Identify the unstated assumption bridging the premises and conclusion.
The author assumes that replacing the sole driver of productivity growth with automation will result in a net negative outcome for overall productivity.
For the switch to exacerbate stagnation, the new investment (automation) must yield less benefit than what was sacrificed (training).
3
Apply the Negation Test to verify the correct option.
Negation: The automation gains WILL fully offset the lost training productivity. This destroys the conclusion, proving the original statement is a necessary assumption.
The Negation Test definitively proves whether an assumption is logically necessary for the argument to hold.

Key Concept

Identifying Necessary Assumptions via the Negation Test
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Topics

Necessary Assumption

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