Chronologically, arrange the following events:
(A) Announcement of demonetisation.
(B) Circulation of fake currency.
(C) Existing ₹500 and ₹1000 notes lost legal tender.
(D) Visible reduction in tax evasion.
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → (B), (A), (C), (D)
Demonetisation was the government’s step of withdrawing old currency notes, taken in November 2016. The events run from the problem, to the step, to its effect:
(B) Circulation of fake currency. — This was one of the problems it set out to tackle, so it comes first.
(A) Announcement of demonetisation. — The government announced the step in November 2016.
(C) Existing ₹500 and ₹1000 notes lost legal tender. — This was the step itself, so it came together with the announcement. Legal tender means money that must be accepted in payment.
(D) Visible reduction in tax evasion. — This effect came later. Tax compliance improved, as a large number of people were brought under tax.
NCERT (2026-27): Introductory Macroeconomics — Chapter 3: Money and Banking
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