Cause & Effect — Identify the Relationship: I. The Reserve Bank of India reduced interest rates. II. Housing loans witnessed an increase. Which option best captures the causal link between I and II?

Introduction / Context:Interest rates influence the cost of borrowing. A reduction typically boosts loan demand, including for housing.

Given Data / Assumptions:

• I: RBI reduced policy/market rates.
• II: Uptick in housing loans.
• Assume pass-through to lending rates and credit supply.

Concept / Approach:Lower rates reduce EMIs and improve eligibility, expanding demand for mortgages. Hence, I→II.

Step-by-Step Solution:

Verification / Alternative check:Though other factors matter (income, supply), the immediate directional effect is clear.

Why Other Options Are Wrong:They invert or dilute the straightforward monetary-transmission logic.

Common Pitfalls:Overlooking lags; the stem abstracts from timing granularity but seeks the primary direction.

Final Answer:Option A: I is the immediate cause and II is its effect.