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# While Governor Verdant has been in office, the states budget

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Intern
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While Governor Verdant has been in office, the states budget [#permalink]

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04 Jun 2009, 21:49
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49% (02:26) correct 51% (01:53) wrong based on 123 sessions

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While Governor Verdant has been in office, the states budget has increased by an average of 6 percent each year. While the previous governor was in office, the states budget increased by an average of 11.5 percent each year. Obviously, the austere budgets during Governor Verdants term have caused the slowdown in the growth in state spending.

Which of the following, if true, would most seriously weaken the conclusion drawn above?

(A) The rate of inflation in the state averaged 10 percent each year during the previous governors term in office and 3 percent each year during Verdants term.

(B) Both federal and state income tax rates have been lowered considerably during Verdants term in office.

(C) In each year of Verdants term in office, the states budget has shown some increase in spending over the previous year.

(D) During Verdants term in office, the state has either discontinued or begun to charge private citizens for numerous services that the state offered free to citizens during the previous governors term.

(E) During the previous governors term in office, the state introduced several so-called austerity budgets intended to reduce the growth in state spending.

Can anyone help me in the same?
[Reveal] Spoiler: OA
Director
Joined: 03 Jun 2009
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Location: New Delhi
WE 1: 5.5 yrs in IT
Re: While Governor Verdant has been in office, the states budget [#permalink]

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04 Jun 2009, 22:09
I think the answer should be E

(A) The rate of inflation in the state averaged 10 percent each year during the previous governors term in office and 3 percent each year during Verdants term. - Strengthens the argument

(B) Both federal and state income tax rates have been lowered considerably during Verdants term in office. - Out of scope

(C) In each year of Verdants term in office, the states budget has shown some increase in spending over the previous year.- Out of scope

(D) During Verdants term in office, the state has either discontinued or begun to charge private citizens for numerous services that the state offered free to citizens during the previous governors term.- Out of scope

(E) During the previous governors term in office, the state introduced several so-called austerity budgets intended to reduce the growth in state spending. - weakens the argument by providing an alternate reason for slowdown. Based on this one can say that the slowdown might has happened due to previous governors policies.
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Re: While Governor Verdant has been in office, the states budget [#permalink]

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04 Jun 2009, 22:31
Answer as per 1000 SC is A.

as per one of the explaination on net
http://www.beatthegmat.com/state-s-budg ... 12655.html

In India, right now the rate of inflation is 11.05%. the highest is last 13yrs.
following r the main reasons, as cited by the experts:
1)high import oil prices.
2)big farm loan waiver by the government (close to Rs71000 crore - an election gimmick).
3)high GDP growth.
4)depreciting rupee .........etc.
so if the inflation is down, in some cases it will allow the government to have extra funds to spend on the states, if it wants to.in such cases A will actually strengthen the argument.

so u see it depends upon what the scenario is. there is nothing mentioned in the passage about the rate of inflation.
hence A is out of scope.

Thanks!

yeah i saw that in newpaper today ...... and reasons given by you are true....

BUT, you forgot to mention a very important reason .... India's growth .... In any economy one of the main reasons for hight inflation is high growth rate...

so coming back to our question..... if we take option A, some portion of less growth can be attributed to less infaltion (10 to 3). So its not entirley Mr Verdant's fault .....

BTW the question is from 1000CR and the OA is A.... 8)

Do u think Inflation has something to do with state spending ...???
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Re: While Governor Verdant has been in office, the states budget [#permalink]

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04 Jun 2009, 23:00
1
KUDOS
ya, may be "state spending" is directly effected by "inflation". If inflation increases, prices will increase and "state spending" will slowdown.

But, if we take it other way, if "state spending" slows down, prices will fall, inflation will decrease (this is what is happening currently across globe).

So if inflation is lower during Verdant's period, is it due to slowdown in "state spending" or is it due to his policies ? confusing ?

I think this argument has been written before the recent global meltdown
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Re: While Governor Verdant has been in office, the states budget [#permalink]

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04 Jun 2009, 23:33
imo, the answer shud be A.

The argument states that governor verdant has given austere budgets which caused slowdown in the state's budget.

and option A says that the rate of inflation was low when compared to rate of inflation in previous terms.. hence more budget is not necessary.. inturn means no slow down in govt spending..

for example,

when rate of inflation is 10 %, laying a road will cost you 110.-->budget 110
when rate of inflation is 3%, laying the same road will cost you only 103. --> budget 106. ( surplus )

hence verdant didnt actually slowdown govt expenditure.. when the rate of inflation is considered.
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Re: While Governor Verdant has been in office, the states budget [#permalink]

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07 Jun 2009, 11:00
I'm with A too as the point of inflation clearly weakens the Austerity aspect.
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Re: While Governor Verdant has been in office, the states budget [#permalink]

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07 Apr 2011, 11:27
i got that lower Inflation led to lower spending.
but i believe i can convincingly argue that Higher inflation will also lead to lower spending.

So we get: be it lower or higher, either way we have lower spending. i think the question is badly constructed.
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Re: While Governor Verdant has been in office, the states budget [#permalink]

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07 Apr 2011, 18:13
Was confused between A & B. Going with A
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Re: While Governor Verdant has been in office, the states budget [#permalink]

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24 Oct 2013, 16:21
1
KUDOS
nik1608nik wrote:
While Governor Verdant has been in office, the states budget has increased by an average of 6 percent each year. While the previous governor was in office, the states budget increased by an average of 11.5 percent each year. Obviously, the austere budgets during Governor Verdants term have caused the slowdown in the growth in state spending.

Which of the following, if true, would most seriously weaken the conclusion drawn above?

(A) The rate of inflation in the state averaged 10 percent each year during the previous governors term in office and 3 percent each year during Verdants term.

(B) Both federal and state income tax rates have been lowered considerably during Verdants term in office.

(C) In each year of Verdants term in office, the states budget has shown some increase in spending over the previous year.

(D) During Verdants term in office, the state has either discontinued or begun to charge private citizens for numerous services that the state offered free to citizens during the previous governors term.

(E) During the previous governors term in office, the state introduced several so-called austerity budgets intended to reduce the growth in state spending.

Can anyone help me in the same?

Yes, I can help. OK let's do it!

Conclusion: Austere B of New G ---> Slowdown in growth in spending.
Premise: New G, B +6%, Old G B +11.5%

So this is basically saying that since the budget increased less then the new governor is also spending less money.

Which will weaken?

Sounds like we need to find a reason to show why despite an declining budget the amount of spending has not decreased at all.

(A) The rate of inflation in the state averaged 10 percent each year during the previous governors term in office and 3 percent each year during Verdants term. ----> So this basically says that if inflation was higher previously then this may be the the reason why state budgets were higher during that time. So the fact that we have a lower budget now is explained by some other reason. So the use of this piece of evidence to prove that the G is spending less is not precise. We'll leave this one in

(B) Both federal and state income tax rates have been lowered considerably during Verdants term in office ---> OK, so taxes are lowered, this could mean with have more or less budget, we don't know depends on laffer curve, so this tells us nothing

(C) In each year of Verdants term in office, the states budget has shown some increase in spending over the previous year--> OK this is the past, we don't really care what happened

(D) During Verdants term in office, the state has either discontinued or begun to charge private citizens for numerous services that the state offered free to citizens during the previous governors term.--> OK so if they provide less free services they should have a higher budget, well it seems that it is not working for some reason, but again this doesn't really tells us anything

(E) During the previous governors term in office, the state introduced several so-called austerity budgets intended to reduce the growth in state spending.---> So old G introduced measures to reduce growth in spending. This is again something that happened in the past and does not really give us much information.

So I will go with (A)
Hope it helps!
Cheers!
J

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Re: While Governor Verdant has been in office, the states budget [#permalink]

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24 Oct 2013, 23:23
Hi, why is C wrong/"out of scope" here ?

Conclusion : Austere budgets during Governor Verdants term have caused the slowdown in the growth in state spending.

(C) In each year of Verdants term in office, the states budget has shown some increase in spending over the previous year.

Weaken the conclusion : (C) weakens by saying that under Verdant's term state spending was increasing over previous years i.e. there was an increase in growth in state spending year by year under his term.

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Re: While Governor Verdant has been in office, the states budget [#permalink]

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22 Jun 2016, 11:33
The question's OA is A

Here's what I wrote in my CR log to analyse the question:
Here we are talking about Spending, and we are saying spending slowed down because of Gov Verdant’s austerity budgets, but as option A shows it simply might be because inflation went down (a lot) and so in a absolute way spending actually went up!

Den
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Re: While Governor Verdant has been in office, the states budget [#permalink]

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31 Oct 2016, 07:02
bigoyal wrote:
ya, may be "state spending" is directly effected by "inflation". If inflation increases, prices will increase and "state spending" will slowdown.

But, if we take it other way, if "state spending" slows down, prices will fall, inflation will decrease (this is what is happening currently across globe).

So if inflation is lower during Verdant's period, is it due to slowdown in "state spending" or is it due to his policies ? confusing ?

I think this argument has been written before the recent global meltdown

The relationship between price increase and the reduction in the budget is not so straightforward. The actual expenditure may actually increase or decrease depending on how responsive is the buying behavior of govt. In the present example, the reduction in prices, keeping what the state consumes unchanged, reduces the expenditure and therefore less budget needs to be spent.
Now since this relationship is not straightforward, I still see it as an explanation that could explain better than any other choice.
Re: While Governor Verdant has been in office, the states budget   [#permalink] 31 Oct 2016, 07:02
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