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Question

Difficulty: MediumCause and Effect Reasoning

Match each administrative policy or natural event in List I with its most direct logical outcome or primary effect in List II.

  • The central bank increases the benchmark interest rate substantially.Commercial borrowing costs rise, leading to a deliberate slowdown in corporate expansion projects.
  • A severe deficit in monsoon rainfall affects the primary agricultural belt.The overall yield of water-intensive crops declines, driving up wholesale market food prices.
  • The municipal corporation implements a heavy congestion tax for private vehicles entering the central business district.Daily ridership on the metropolitan public transit network experiences a noticeable surge.
  • The government introduces massive subsidies for the domestic manufacturing and installation of solar panels.The adoption rate of renewable energy systems in residential sectors increases dramatically.

Answer

The correct pairings are: Monetary policy tightening with borrowing reduction; Rainfall deficit with crop yield decline; Congestion tax with public transit surge; and Solar subsidies with renewable adoption.
Each correct match pairs an independent variable (the cause or policy) with its most direct, logical dependent variable (the effect or outcome). The relationships rely on standard principles of economics, public behavior, and environmental science without requiring unstated assumptions.

Step-by-Step Solution

1
Analyze the first event regarding the central bank increasing interest rates.
Identify that higher interest rates make loans more expensive.
This directly links to the effect of rising commercial borrowing costs and slowing corporate expansion.
2
Examine the second event regarding a severe monsoon rainfall deficit.
Recognize this as an agricultural stress factor.
A lack of water directly impacts crop growth, logically leading to decreased yields and increased market prices.
3
Evaluate the third event about a municipal congestion tax.
Determine that this acts as a financial deterrent for driving private vehicles in the downtown area.
Commuters will seek cheaper alternatives, directly resulting in a surge in public transit ridership.
4
Assess the fourth event concerning subsidies for solar panels.
Conclude that financial subsidies reduce the out-of-pocket cost for end-users.
Lower costs directly stimulate market demand, resulting in a dramatic increase in residential renewable energy adoption.

Key Concept

Identifying direct causal relationships by connecting macroeconomic, environmental, and administrative events with their immediate logical outcomes.
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Topics

Cause and Effect Reasoning

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