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Quote:
Although preparation of a clearly stated fiscal policy can help coordinate the process of organizing the state's budget, it is unlikely that the fiscal policy's effect on their actual expenditure is significant if adequate funds are not available.

A. it is unlikely that the fiscal policy's effect on their actual expenditure is significant
"their" referent is not clear

B. the fiscal policy's effect on their actual expenditure is unlikely
pronoun error same as A, also the "significant" essence is not present

C. the significance of the fiscal policies' effect is unlikely
significane and significant mean different things. Here in the original sentence, the effect's degree (extent) is talked and not the importance of the effect

D. the fiscal policy's effect on actual expenditures is not likely to be significant
Correct choice

E. the fiscal policy's affect on actual expenditures is unlikely to be significant
"affect" changes the meaning of the sentence
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Official Explanation

(D) The best choice must make clear what is influencing what.
Because "state" is a singular noun and because the fiscal
policy is affecting the state's expenditures, the underlined portion cannot use the pronoun their, which is plural. Choices (A) and (B) both use "their" and are, therefore, incorrect.
Choice (C) is awkward and replacing "the fiscal policy's effect" (singular) with "the fiscal policies' effect" (plural) changes the meaning of the sentence. Choice (E) incorrectly substitutes the word "affect" for "effect".
Choice (D) is the best answer.
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I've never seen a question or prep program review affect vs. effect. Similarly their vs. there vs they're. Are these tested by the GMAT?
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If option E had "effect" then amon D and E which one would be correct? Is there any preference of "Not likely ot be significant" that "unlikely to be significant"?
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