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What was the immediate effect of demonetization on the demonetized notes? |
They became more valuable They ceased to be legal tender They were replaced with new notes They were used for general purposes only |
They ceased to be legal tender |
The immediate effect of demonetization on the demonetized notes is: Option 2: They ceased to be legal tender. The immediate effect of demonetization is that the demonetized notes cease to be legal tender, meaning they cannot be used as a medium of exchange for goods and services. "The Government of India, made an announcement on November 8, 2016 with profound implications for the Indian economy. The two largest denomination notes ₹500, ₹1,000, were ‘demonetised’ with immediate effect, ceasing to be legal tender except for a few specified purposes such as paying utility bills. This led to eighty six per cent of the money in circulation invalid. The people of India had to deposit the invalid currency in the banks which came along with the restrictions placed on cash withdrawals. In other words, restrictions were placed on the convertibility of domestic money and bank deposits." |
