Cause–Effect reasoning: Link petroleum price revision to inflation movement over the week. Statement I: The Government reduced petroleum product prices by 5% a week after increasing them by 10%. Statement II: The inflation rate dropped marginally during the last week. Choose the correct option describing the relationship.
Verbal Reasoning
Cause and Effect
Difficulty: Easy
Choose an option
-
AStatement I is the cause and Statement II is its effect
-
BStatement II is the cause and Statement I is its effect
-
CBoth are independent causes
-
DBoth are effects of independent causes
-
EBoth are effects of a common cause
Answer
Correct Answer: Statement I is the cause and Statement II is its effect
Explanation
Approach Petroleum products have significant weight in price indices. A reduction in administered/retail fuel prices generally eases headline inflation, other things equal.
Reasoning The 5% cut (Statement I) would mechanically lower fuel components, contributing to a marginal weekly drop in inflation (Statement II). The reverse direction is less direct.
Final Answer Statement I is the cause and Statement II is its effect