question_answer

Direction: Q. 6 to 10

Read the following case study and answer the questions.

On 8th November, 2016, the Prime Minister of India, Narendra Modi, took the nation by surprise by announcing that the government was demonetising currency with denominations of 500 or 1,000 rupees, with immediate effect. This amounted to the demonetisation of 86 percent of the Indian currency in circulation. Holders of the demonetised currency were given till 31st December, 2016 to exchange their demonetised bills for newly issued currency, which would be in denominations of 500 and 2,000 rupees.

Demonetisation as a tool for fighting crime, tax evasion, and activities in the underground economy has been advocated in the past. The argument rests on the premise that, in an international context, many underground economic activities are financed using large-denomination currency notes. A unique aspect of the Indian measure was that it was carried out during a period of economic stability, but with very little time given to the public to exchange their demonetised bills. This created the potential for a lot of disruption and inconvenience since the demonetised bills, especially the 500 rupee bill (worth about US Dollar 14 at prevailing exchange rates), were heavily in use for daily transactions.

Demonetisation implies ......... .

A) stripping the legal tender status of a currency

B) removing certain currency notes from the market and investing them in government bonds

C) deliberately reducing the flow of certain currency bills for a specified period of time

D) Allot the above