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.

Correct — B.
Rule: the cause comes first and produces the effect. Ask which statement explains the other.

II, cost-cutting and better loan recovery, is what the bank did.
I, a sharp rise in net profit, is the result: lower costs and less money lost on unpaid loans leave more profit.

II is the cause and I is the effect → option (b).

Why the others are wrong

• (a)
  I is the cause and II is the effect. — I is the cause reverses the direction. Profit is the result of costs and recoveries, so the measures in II explain the rise in I, not the other way round.
• (c)
  Both are independent effects. — Independent effects would mean each statement follows from its own, unrelated cause. Here II directly explains I, so the two are linked, not independent.
• (d)
  No relation. — No relation ignores the link: cutting costs and recovering loans both raise a bank's profit, which is what I reports.

In a cause-and-effect pair, the cause is the action or event and the effect is what follows from it. Test both directions, 'II, therefore I' and 'I, therefore II', and keep the one that makes sense.

The printing order decides nothing. Here the cause is printed second: the measures (II) explain the result (I).

Key facts

• The cause is the action, and the effect is its result.
• Which statement is printed first does not show which is the cause.
• Cost-cutting and better loan recovery both raise a bank's profit.

Common traps

• Taking Statement I as the cause because it is printed first
• Calling the two independent because II lists two separate measures

No directly related past PYQ was found.