<p>Evaluation of plan Situation:- Because the lack of available money for development loans is harming businesses, the government plans to modify the incometax structure, encouraging taxpayers to put more money into retirement accounts. This plan is intended to ensure that with more money put into these accounts, more money will in turn be available to business borrowers. Reasoning:- What potential flaw in this plan might prevent it from being effective? What is the expectation behind the plan? The government&acirc;&euro;&trade;s plan supposes that the money invested in retirement accounts will be available to business borrowers in the form of development loans. Consider what circumstances might hinder that availability. What if consumer borrowers compete with businesses? If it is known that, historically, increased savings in personal retirement accounts corresponds with increased consumer borrowing, then the government&acirc;&euro;&trade;s effort to target businesses as the beneficiaries of this plan could well fail. A Correct. This statement properly identifies a reason that the government&acirc;&euro;&trade;s plan could be less effective in meeting its goal. B A predicted revenue shortfall does not directly affect the plan&acirc;&euro;&trade;s effectiveness in reaching its stated goal, and might be deemed an acceptable cost of achieving that goal. C As long as the total amount deposited in personal retirement accounts increases sufficiently, the decision of some people not to increase their contributions will not keep the plan from achieving its goal. D The plan would increase the money available specifically for development loans, not existing loans. E The universal tax savings does not affect the effectiveness of the plan. The correct answer is A.</p>
