Logical Reasoning

PT106 · S1 · Q17 When a community opens a large

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When a community opens a large shopping mall, it often expects a boost to the local economy, and in fact a large amount of economic activity goes on in these malls.

Background

Opening a large shopping mall is often expected to boost the local economy and a lot of economic activity does transpire in these malls.

Surprising Claim

The increase in the local economy is way smaller than the total amount of economic activity that goes on in the mall.

Evaluate

It might take a re-read or two to process what this last sentence is saying, but essentially it's saying something like this:

Before Mall: local economy was $100 million + New Mall: $5 million of activity in mall

yet, Local economy + mall: $101 million

One might have expected that if $5 million of business is being done in the mall, then that would be purely additive to the local economy, bringing us from $100 to $105 million.

But, if the amount of business the mall is doing ($5 million) is more than the boost to the local economy ($1 million), that suggests mathematically that the economic activity in the mall is "stealing" economic activity from elsewhere in the local economy.

Goal

Look for an answer saying that a new large shopping mall will "steal" business from other places in the local economy, or an answer that somehow otherwise explains why the money being made in the mall isn't all being added onto the previous total of economic activity in the local economy.

What else could change with the new mall that would make the local economy do worse?

17.

Which one of the following, if true, most helps to explain the discrepancy described above?

When large shopping malls are
No Impact
This is just saying that business at the mall declines over time, but we need a way of understanding what is offsetting the money being made in the mall. Whether the mall's business declines or stays steady, we are still seeing that you can't just add what money is made in the mall to the local economy's previous total. Something is offsetting that money, and this answer isn't telling us what.
3% picked this
Most of the money spent
Opposite
This would make it more likely that mall money is new money to the local economy. We need an answer that sounds more like the opposite of this: "most of the money being spent in a new mall is just money that would have otherwise been spent elsewhere in the local economy".
23% picked this
Most of the jobs created
Opposite, if Anything
Usually when a local economy receives an influx of new workers, the economic activity of that area rises. So, this answer is making it seem like the local economy should be getting boosted -- not only is the mall making money, but the city also has new workers who will spend their mall paycheck income elsewhere in the city.
1% picked this
Correct
Most of the money spent
Why this is right
Before the mall, I would have spent $100 this weekend at various stores throughout this community. Now that the mall is built, I'm spending $100 this weekend at the mall. Does that boost the local economy? No, it's just re-allocated the same pool of money from various stores throughout the community to various stores within the large shopping mall. That type of phenomenon solves the math problem they're giving us. "If a new mall comes to town, and it does $5 million in business, then how come the local economy only increases by $1 million?" Because ... most of that $5 million of mall money is not "new" money. It's money that would have otherwise been spent elsewhere in the same community. Maybe the mall is making $5 million, but now collectively the rest of the stores outside the mall are making $4 million less than they used to (offsetting the new mall income).
Skill tested: Paradox · how this choice captures the argument's function is the move to repeat next time.
61% picked this
Most of the jobs created
No Impact
This answer might have some explanatory power when it comes to the prosperity of the people living in this community, but it doesn't do anything to solve our math problem. How come the money being made in this new mall is not purely additive to the local economy? What's offsetting it? This answer isn't giving us a clear storyline the way the correct answer does.
11% picked this

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