Cause–Effect reasoning: Relate a current incentive announcement to last year's broad tax hike. Statement I: The State Government announced a special tax package for new industries to be set up in the State. Statement II: Last year the State Government hiked taxes for all industrial activities in the State. Choose the correct option describing the relationship.

Verbal Reasoning Cause and Effect Difficulty: Easy
Choose an option
  • A
    Statement I is the cause and Statement II is its effect
  • B
    Statement II is the cause and Statement I is its effect
  • C
    Both are independent causes
  • D
    Both are effects of independent causes
  • E
    Both are effects of a common cause

Answer

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

Explanation

Interpretation A prior across-the-board hike could have dampened investment; a subsequent special package is a corrective to attract new units.

Causal chain Earlier hike (II) → investment concerns/pressure → incentive package (I).

Note This direction is more plausible than the reverse; both statements clearly connect via policy response.

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

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