Q21 - Finance minister: The World Bank's "Doing Business"

[ohthatpatrick]

Question Type:
Evaluate

Stimulus Breakdown:
Conclusion: Our "DB" ranking will probably improve.
Evidence: The "DB" ranking measures how easy it is to do business with a country, in terms of how hard it would be for a hypothetical company to comply with a country's regulations/taxes. And we've simplified our taxes for small and midsized businesses since our last "DB" ranking".

Answer Anticipation:
The big question is ... "is the hypothetical business small or midsized"? The changes that would potentially improve the DB score only apply to small and midsized businesses. Is the hypothetical business that the World Bank uses small / midsized / large / too big to fail?

Correct Answer:
D

Answer Choice Analysis:
(A) We're only concerned with whether the DB ranking improves, not whether the economy in the country will itself change.

(B) We don't care about compliance, just the DB ranking.

(C) Fake fight. The DB metric factors in taxes and regulations. It doesn't rank them against each other. It combines them to get an overall sense of how easy/difficult it is to do business with a country.

(D) YES! It was easy to scan for "how big is the hypothetical business" and find this answer without reading any of the other answers. The answer itself is worded weirdly to slow us down, but if a midsized business is SMALLER than the hypothetical business, then the hypothetical business is a large and thus the simplified tax code doesn't necessarily affect the ease of this large hypothetical business doing business with this country.

(E) This hopefully gave us a good chuckle. Who cares whether he/she was there for the last ranking?

Takeaway/Pattern: Evaluate questions are back! After having died out for about 20 tests, there seems to be 1 or 2 of these per test now. The correct answer asks a question that could be answered in a way that would be a solid objection to the argument. In this case, if we said 'yes' to (D), it would be a solid objection, because it would mean that the tax changes that supposedly woudl improve the DB ranking are actually irrelevant to how the DB ranking gets measured.

#officialexplanation

[TingR721]

Thanks for the explanation! I have a question for B. If the answer to B is yes, which means compliance with tax laws by small and midsized businesses has not increased since tax filling was simplified, would that completely destroy the argument as that would indicate the policy didn't work at all?

[HaleyS746]

The way i understood it:

B talks about actual compliance by businesses. Ease of compliance and actual compliance aren't the same thing- just because a rule is easy to follow doesn't mean it will never be broken. Besides, we don't care how many businesses ACTUALLY comply with the regulations and pay taxes, we only care about how EASY it is for this hypothetical business to comply with this finance minister's regulations.