Direction: In each question below is given a statement followed by two conclusions numbered I and II. You have to assume everything in the statement to be true, then consider the two conclusions together and decide which of them logically follows beyond a reasonable doubt from the information given in the statement. Give answer
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Statement:
Global credit rating agency Standard and poors's (S&P) downgraded India's local currency rating to junk bond status. But India's foreign currency rating has been maintained at the same level as earlier, ie at junk bond or speculative grade.
Conclusions :
I. The downgrade is likely to demoralise the stock and foreign exchange markets and make overseas borrowing costlier.
II. India is gradually approaching a debt trap.
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- if only conclusion I follows
- if only conclusion II follows
- if either I or II follows
- if neither I nor II follows, and
- if both I and II follow
Correct Option: A
Local currencies rating plays a pivotal role in stock and foreign exchange market as well as overseas borrowing. Hence conclusion I follows. Conclusion II does not necessarily follow because the given revelation is not enough.
