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).
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 the statements I and II are independent causes
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DBoth the statements I and II are effects of independent causes
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EBoth the statements I and II are effects of some common cause
Answer
Correct Answer: Statement I is the cause and statement II is its effect
Explanation
Given data
- I: Government imports large sugar volumes.
- II: Domestic sugar prices fall sharply.
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 AnswerStatement I is the cause and statement II is its effect.