medium · GMAT Verbal

An analyst claims that increasing the minimum wage leads to higher overall consumer spending because low-wage workers tend to spend a higher percentage of their income.

Which of the following, if true, most strengthens the analyst's conclusion?

  1. Most low-wage workers currently save less than five percent of their take-home income, meaning that they already spend nearly all of what they earn during a typical month.
  2. The federal minimum wage in the country has not been adjusted upward to keep pace with inflation at any point during the past several years.
  3. Some businesses that are faced with higher labor costs may well respond by raising the prices of at least some of the goods and services that they sell to consumers.
  4. Studies confirm that added spending by low-wage workers is not cancelled out by reduced spending from other groups affected by the wage increase.
  5. The low-wage workers who were surveyed report that they personally would feel noticeably more financially secure if they were paid a somewhat higher hourly wage.

Sign up free to see the explanation and track your rank →

More GMAT Verbal practice

KomFi: Test Prep Made Easy

KomFi: Test Prep Made Easy — free adaptive practice for GMAT, GRE, SAT, ACT, National Real Estate Exam, Investment Banking, and finance with full explanations.

KomFi Academy is free GMAT prep and personalized GMAT help built as a training platform: 89,613+ practice questions, 30,000+ flashcards, on-demand video lectures, podcasts, and 4K slide decks. Flagship tracks: Free GMAT Prep, Free GMAT Resources, National Real Estate Exam Prep, Investment Banking Prep, Finance Prep, GRE, SAT, ACT, LSAT, MCAT, Financial Accounting, Private Equity, Private Credit, and Quantitative Finance.

Free GMAT Prep & Personalized GMAT Help

What's inside

Topics

View pricing · Read testimonials