Demonetization refers to:

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Target Exam

CUET

Subject

Economics

Chapter

Macro Economics: Money and Banking

Question:

Demonetization refers to:

Options:

Restrictring money supply in the economy by the government.

Restricting new currency and coin printing by the government.

Declaring any existing hard currency or coins as no longer a legal tender for some time.

Declaring all or few existing hard currency or coins as no longer a legal tender forever.

Correct Answer:

Declaring all or few existing hard currency or coins as no longer a legal tender forever.

Explanation:

The correct answer is Option (4) → Declaring all or few existing hard currency or coins as no longer a legal tender forever.

Demonetization means the withdrawal of the legal tender status of a currency unit by the government.
In other words, certain notes or coins are declared invalid for transactions and cannot be used as money anymore.