Question

Choose the incorrect statement with respect to demonetization:

• A. The two largest denomination notes of ₹500 and ₹1,000 were demonetized with immediate effect, ceasing to be legal tender except for buying properties.
• B. The aim of this step was to curb corruption and accumulation of black money.
• C. It led to the tax administration channelizing savings into the formal financial system.
• D. Restrictions were placed on the convertibility of domestic money and bank deposits.

Hint:

Demonetization impacts liquidity, financial transactions, and economic policies. Understanding its objectives and effects is crucial for economic studies.

Answer 1

The Correct Option is A

Step 1: Understanding Demonetization
Demonetization refers to the withdrawal of specific currency notes from circulation to curb corruption, promote digital transactions, and bring black money into the formal economy.
Step 2: Identifying the Incorrect Statement
- (A) is incorrect because demonetized notes were no longer legal tender for any transactions, including property purchases.
- (B) is correct as demonetization aimed at reducing corruption and black money.
- (C) is correct since it encouraged formal financial transactions.
- (D) is correct as temporary restrictions were placed on cash withdrawals and deposits.
Conclusion: The correct answer is (mathbf{(A)}), as the demonetized notes were not valid for purchasing properties.