Question

Given below are two statements: one is labelled as Assertion (A) and the other is labelled as Reason (R). Assertion (A): There is increase in the volatility in the global financial markets. Reason (R): In recent years there has been greater geopolitical stability and trade policy certainty. In the light of the above statements, choose the most appropriate answer from the options given below.

• A. Both (A) and (R) are correct and (R) is the correct explanation of (A).
• B. Both (A) and (R) are correct but (R) is not the correct explanation of (A).
• C. (A) is correct but (R) is not correct.
• D. (A) is not correct but (R) is correct.

Hint:

Major causes of global financial market volatility include:
• Inflation.
• Geopolitical conflicts.
• Interest rate changes.
• Trade uncertainty.
• Global economic slowdown. Greater geopolitical stability generally reduces market volatility.

Answer 1

The Correct Option is C

Concept: Global financial markets experience volatility due to economic uncertainty, geopolitical tensions, inflation, monetary policy changes, supply chain disruptions and fluctuations in international trade. Greater geopolitical stability generally reduces uncertainty and financial market volatility.

Step 1: Examine Assertion (A). In recent years, global financial markets have experienced significant volatility because of:
• Geopolitical conflicts.
• Inflationary pressures.
• Changes in interest rates.
• Supply chain disruptions.
• Global economic uncertainty. Hence, \[ \boxed{\text{Assertion (A) is Correct.}} \]

Step 2: Examine Reason (R). The reason states that recent years have witnessed greater geopolitical stability and trade policy certainty. This statement is incorrect because recent years have instead been characterized by:
• Geopolitical conflicts.
• Trade tensions.
• Policy uncertainty.
• Financial instability. Therefore, \[ \boxed{\text{Reason (R) is Incorrect.}} \]

Step 3: Choose the correct option. Since Assertion (A) is true but Reason (R) is false, \[ \boxed{\text{Correct Answer}=(C)} \]