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Rate of Inflation

Given below i...

Question

Given below is a pair of events I and II. You have to decide their nature of relationship. Assume that the given information is correct and final.
I. inflation rate in India ha come down
II. Reserve bank of India has increased interest rate.

A

I is the main cause and II is the main effect

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B

I is effect but II is not the main cause

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C

II is the main cause and I is the main effect

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D

II is an effect but II is not the main cause.

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Solution

The correct option is C II is the main cause and I is the main effect
Reserve Bank of India changes the interest rate to cater to the rise and fall of inflation rate in the country Thus, decrease in inflation rate I is a result of increase in interest rates II by the government . Hence II is the main cause and I is the main effect . Option (c) is the correct choice.

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