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Assertion (A) : The volume of imports tends to be very high when there is a conjecture of high rate of economic growth and a sharp fall in the relative price of imports and vice versa. Reason (R) : High rate of growth, ceteris paribus, is associated with rise in imports and increase in the imports, ceteris paribus, is associated with a fall in the relative price of imports.

Assertion (A) : The volume of imports tends to be very high when there is a conjecture of high rate of economic growth and a sharp fall in the relative price of imports and vice versa. Reason (R) : High rate of growth, ceteris paribus, is associated with rise in imports and increase in the imports, ceteris paribus, is associated with a fall in the relative price of imports. Correct Answer Both (A) and (R) are correct and (R) is the right explanation of (A).

Assertion (A): The volume of imports tends to be very high when there is a conjecture of a high rate of economic growth and a sharp fall in the relative price of imports and vice versa.

Explanation:

  1. When there is a conjecture (guess) that economic growth is going to rise and the price of imports is going to fall relative to the price of domestically produced goods, then the volume of imports rises as imports become cheaper than domestic goods due to a rise in the value of the domestic currency relative to the value of the foreign currency. 

​Thus, the assertion is correct.

Reason (R): High rate of growth, ceteris paribus, is associated with a rise in imports and increase in the imports, ceteris paribus, is associated with a fall in the relative price of imports.

Explanation:

Besides import regulations, the important factors which determine the volume of imports are as follows: 

  1. Rate Of Growth Of The Economy: High rate of growth, ceteris paribus, is associated with rising imports. 
  2. Relative Price Of Imports: This refers to the relative change in the prices of imports and domestic goods. An increase in imports, ceteris paribus, is associated with a fall in the relative price of imports.

From the above two factors, it can be inferred that the volume of imports tends to be very high when there is a conjecture of a high rate of economic growth and a sharp fall in the relative price of imports and vice-versa.

Thus, Both (A) and (R) are correct and (R) is the right explanation of (A).

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The Proper sequence should be:
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