Trade policy impact on prices: Judge Statements I and II — 'Government imported large quantities of sugar under trade agreements' and 'Domestic sugar prices have fallen sharply in recent months' — and classify the relationship (cause, effect, independent, or common cause).

Difficulty: Easy

Correct Answer: Statement I is the cause and statement II is its effect

Explanation:

Given data

Concept/Approach

Basic supply–price logic: higher supply (via imports) tends to reduce prices, ceteris paribus.

Step-by-step evaluation

1) Import surge → market supply increases.2) Excess supply relative to demand → price decline.3) Thus I (cause) → II (effect).

Verification/Alternative

Price fall causing earlier imports is temporally inconsistent.

Final Answer
Statement I is the cause and statement II is its effect.

Discussion & Comments

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