Question:
Choose the incorrect statement with respect to demonetization:
Choose the incorrect statement with respect to demonetization:
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Demonetization impacts liquidity, financial transactions, and economic policies. Understanding its objectives and effects is crucial for economic studies.
Updated On: Feb 20, 2025
- The two largest denomination notes of ₹500 and ₹1,000 were demonetized with immediate effect, ceasing to be legal tender except for buying properties.
- The aim of this step was to curb corruption and accumulation of black money.
- It led to the tax administration channelizing savings into the formal financial system.
- Restrictions were placed on the convertibility of domestic money and bank deposits.
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The Correct Option is A
Solution and Explanation
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.
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.
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