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Chapter 2: Problem 15

The \(\$ 464\) million "reserve" in the 2001-2002 budget adopted by the legislature in June turns out to have been based mainly on wishful thinking. Because of tax cuts approved by voters on the June ballot, along with the continuing recession and other events affecting income and expenses, the actual reserve in prospect may be as low as \(\$ 7\) million. The author is probably leading to which of the following conclusions? A. These facts warrant an investigation into who squandered \(\$ 457\) million. B. A reserve in the budget is not so necessary as we might wish it to be. C. The legislature would be wise not to add any new spending to the budget adopted in June. D. The recession will probably not last much longer, but while it does the legislature must adjust the budget accordingly. E. Legislative budgets are typically careless and unheeding of variable factors that may affect their accuracy.

Short Answer

Expert verified
The correct conclusion the author is leading to is C: The legislature would be wise not to add any new spending to the budget adopted in June.

Step by step solution

01

Understand the passage

The passage tells us about a budget reserve, which was initially thought to be \$464 million but due to various factors like tax cuts, the recession, etc., the actual reserve might be as low as \$7 million.
02

Analyze the options

Look at each option and check if it is a sensible conclusion to draw from the information given in the passage. A conclusion must directly follow from the premises provided.
03

Eliminate irrelevant or unsupported options

Options A and E involve blaming somebody or making judgments that aren't supported by the passage. Option B implies that reserves aren't important, which isn't suggested by the passage. Option D refers to the end of the recession, which isn't part of the passage either.
04

Choose the best fit

Option C is the only one remaining and also makes sense in context. Given that the reserve might be lower than expected, it would be wise for the legislature not to add any new spending to the budget.

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