Cause–Effect reasoning: Link import surge to domestic price movement in a commodity market. Statement I: The Government imported large quantities of sugar under trade agreements with other countries. Statement II: Sugar prices in the domestic market fell sharply in recent months. Choose the correct option describing the relationship.
Verbal Reasoning
Cause and Effect
Difficulty: Easy
Choose an option
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AStatement I is the cause and Statement II is its effect
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BStatement II is the cause and Statement I is its effect
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CBoth are independent causes
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DBoth are effects of independent causes
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EBoth are effects of a common cause
Answer
Correct Answer: Statement I is the cause and Statement II is its effect
Explanation
Market mechanics Higher imports increase supply; other things equal, excess supply pushes prices down.
Causal chain Import surge (I) → supply expansion → price falls (II).
Final Answer Statement I is the cause and Statement II is its effect