(a)[2]
- Using Fig. 1.1, describe the immediate effect of demonetisation on India’s M1 money supply. [2]
- Explain one possible reason why India’s M1 money supply rose in early 2017, as shown in Fig. 1.1, after the notes used most often were removed from circulation. [2]
(b)[2]
Explain whether a cheque ought to be treated as money.
(c)[4]
Explain how the Indian government’s decision to withdraw the two most used bank notes is likely to affect the use of cash as a store of value in India over time.
(d)[4]
Explain the possible impact of demonetisation on the Indian government’s fiscal policy.
(e)[6]
Discuss whether demonetisation in India is likely to have an inflationary effect.