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: Defining Demonetization
Demonetization is the act of invalidating specific currency denominations to combat corruption, boost digital payments, and integrate illicit funds into the official financial system.
Step 2: Pinpointing the False Assertion
- (A) is inaccurate because withdrawn currency notes lost their legal tender status for all exchanges, including real estate transactions.
- (B) is accurate as demonetization targeted the reduction of corruption and illicit wealth.
- (C) is accurate as it fostered the adoption of official financial dealings.
- (D) is accurate because temporary limitations were imposed on cash withdrawals and deposits.
Conclusion: The accurate choice is (mathbf{(A)}), as the demonetized currency was not acceptable for property acquisitions.