Identify the relation between Statement I and Statement II. I. The bank’s net profit increased significantly in the last quarter.

Question

Identify the relation between Statement I and Statement II.

Statement

I. The bank’s net profit increased significantly in the last quarter.

Statement

II. The bank implemented cost-cutting measures and improved loan recovery.

1. A. I is the cause and II is the effect.
2. B. II is the cause and I is the effect. (Correct answer)
3. C. Both are independent effects.
4. D. No relation.

Correct Answer

Option B — II is the cause and I is the effect.

Detailed Solution & Explanation

The correct answer is II is the cause and I is the effect..

Key Points

• Statement I reports an outcome — net profit rose sharply last quarter.
• Statement II reports management actions — cost-cutting and better loan recovery.
• Spending less and recovering more loans directly produces higher profit, so II is the action and I is its result.
• They are not independent (the actions clearly bear on profit), and the reverse direction fails because higher profit doesn't force a bank to cut costs.
• Ask which statement could have happened first and produced the other — that one is the cause.