Consider the following statement and choose the option that follows. Statement: The interest rates on fixed deposits have been lowered. Inferences: I. Investors may shift to alternative investment options. II. Fixed deposits are no longer considered safe.
- (a)Only I follows
- (b)Only II follows
- (c)Both follows
- (d)Neither follows
Answer
Why
Correct — A.
Rule: an inference must follow from the statement itself, not from something you add.
I: a lower rate means a lower return on a fixed deposit, so some investors may move money elsewhere. The word may keeps it a possibility, so I follows.
II: the statement is about return, not safety. A rate cut says nothing about whether a deposit is secure, so II does not follow.
Only I follows → option (a).
Why the others are wrong
- (b)Only II follows — Only II keeps the added claim and drops the reasonable one. A rate cut lowers what a deposit earns, and it says nothing about the deposit becoming unsafe.
- (c)Both follows — Both follows accepts II, which reads safety into a statement about interest. The rate a deposit pays and the safety of the money in it are separate things.
- (d)Neither follows — Neither follows rejects I, but I claims only that investors may shift. When a deposit earns less, looking at other options is a reasonable response, and the statement supports that much.
Concept
In a statement–inference item, an inference follows when the statement makes it reasonable without outside facts. A hedged inference, one that says investors may do something, claims only a possibility, so it needs less support than a flat claim.
A cut in fixed-deposit rates lowers the return on that deposit, so a move by some investors to other options is reasonable. The statement says nothing about safety, so calling deposits unsafe is an addition, not an inference.
Strictly, the statement names no investor reaction at all. The key accepts I because a lower return is the direct effect of the cut and I claims only a possibility. It rejects II because safety is a different property from return.
Key facts
- A fixed deposit pays a set rate of interest for a set term.
- A lower interest rate reduces the return on a deposit, not its safety.
- An inference that needs a fact the statement never gives does not follow.
Study next
Common traps
- Accepting II from a general worry about banks, which the statement never raises
- Rejecting I because the statement does not mention investors
21 Sep 2025, 16:00, Reasoning Q.3 is built the same way: a company switching to renewable energy, where only the inference about cutting its carbon footprint is keyed (option a), not a claim that its present energy is expensive.
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