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In the question a statement is followed by some courses of action . A course of action is a step or administrative decisions to be taken for improvement, follow-up, or further action in regard to the problem, policy, etc.You have to assume everything in the statement to be true and then decide which of the given suggested course(s) of action logically follows for pursuing.
Statement: The government has decided to withdraw all the financial assistance it has been providing to the Institutes of higher learning and has urged them to become self-sufficient.
Courses of action:
I. These institutes should increase the number of students substantially so as to enable them to meet the shortfall.
II. These institutes should rationalise the fee structure and also offer consultancy services to meet the shortfall.

Only course of action I follows.
Only course of action II follows.
Either course of action I or II follows.
Neither course of action I nor II follows.
Both courses of action follows.
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