GMAT Critical Reasoning — Assumption The currency of Country A has been strengthening against other worldwide currencies for the past year. This occurs when demand for the currency outpaces its supply and is reversed when there is more supply than demand. Simultaneously, economists have noted a rapid growth in worldwide demand for products manufactured in Country A. This increase in product demand means more buyers need Country A's currency to make purchases, thereby driving up its demand. Therefore, economists conclude that the strengthening of Country A's currency is a result of classic supply and demand factors. Which of the following is an assumption made by the economists in reaching their conclusion? (A) It is not difficult to ship products made in Country A to other countries (B) Country A has lower manufacturing costs than other markets (C) The demand for products manufactured in Country A has been increasing (D) Country A has a regulatory system that ensures its manufactured products meet high quality standards (E) Manufacturing companies in Country A receive payment in Country A's local currency ||The correct answer is (E) . The economists' argument hinges on the chain: increased product demand → buyers need Country A's currency → currency strengthens. But this chain only works if the manufacturers actually require payment in Country A's local currency. If they accepted payment in US dollars or euros, then increased product demand would not increase demand for Country A's currency at all. (E) is a necessary assumption — without it, the causal link breaks. The other options address why demand might exist (quality, costs, shipping) but the argument already takes increased demand as a given; the gap is in how product demand translates to currency demand.||