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:
The Reserve Bank of India (RBI) cut the bank rate (the rate which is also an indicative rate for the banking system) by 25 basis points reducing it to six per cent.
Conclusions :
I. Banks are likely to resort to further cuts in the lending and deposit rates .
II. The move of the RBI is an indication of a strong bias towards soft interest rate regime .
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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
Since bank rate is also an indicative rate for the banking system, conclusion I follows. But conclusion II does not follow because a mere 25-point cut in bank rate by the RBI is not sufficient to corroborate that the move of the RBI is an indication of a strong bias towards a soft interest rate regime.
