LSAT Question Stem

The argument assumes that 

Logical Reasoning Question Type

This is a Necessary Assumption question. 

Correct Answer

The correct answer to this question is A. 

LSAT Question Complete Explanation

Let's first analyze the argument in the passage:

Premise: During the recent economic downturn, banks contributed to the decline by loaning less money.

Premise: Prior to the downturn, regulatory standards for loanmaking by banks were tightened.

Conclusion: Banks will lend more money if those standards are relaxed.

The argument is claiming that if the regulatory standards for loanmaking are relaxed, banks will lend more money. To understand this better, let's use a simple example: Suppose there's a small town with only one bank. Before the economic downturn, the bank was lending money to people freely, but after the downturn, the bank started being more cautious and lent less money. The argument is suggesting that if the rules for lending money become less strict, the bank will start lending more money again.

Now, let's create an "Evaluate" question for this argument: "Did the economic downturn cause a significant decrease in the total amount of money available for banks to lend?"

The question type for this problem is Necessary Assumption, which means we need to identify the assumption that the argument relies on. The correct answer is A.

Answer choice explanations:

A) Correct. The argument assumes that the economic downturn did not cause a significant decrease in the total amount of money on deposit with banks, which is the source of funds for banks to lend. If the downturn did cause such a decrease, it would be more difficult for banks to lend more money even if the regulatory standards were relaxed.

B) This answer choice is irrelevant. The conclusion of the argument is focused on whether banks will lend more money if the standards are relaxed, not on what caused the economic downturn.

C) This answer choice is also irrelevant. Whether the reason for tightening the regulatory standards was arbitrary or not does not affect the conclusion about banks lending more money if the standards are relaxed.

D) This answer choice contradicts the first premise of the argument, which states that during the recent economic downturn, banks contributed to the decline by loaning less money. It cannot be an assumption of the argument.

E) This answer choice is irrelevant as well. The conclusion is about whether banks will lend more money if the standards are relaxed, not about the effects of the downturn.

In summary, the correct answer is A because it addresses a crucial assumption that the argument relies on: that the economic downturn did not cause a significant decrease in the total amount of money available for banks to lend. The other answer choices are either irrelevant or contradict the argument.