Social Science (087) — AI-generated practice question

Demonetisation is the process by which the government declares certain currency notes as invalid (no longer legal tender). In November 2016, the Indian government demonetised ₹500 and ₹1,000 notes, asking people to surrender them to banks and receive new currency.

Reason for promoting digital transactions: Digital transactions — through internet/mobile banking, cheques, ATM/credit cards, and POS machines — were encouraged to reduce the use of cash and also to control corruption.

Source: Money and Credit, Modern Forms of Money / Notes for the Teacher

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• Define demonetisation clearly (declaration of currency as invalid + the 2016 context).
• For the one reason, either "reduce cash requirement" or "control corruption" is acceptable — state both briefly to be safe in a 2-mark answer.
• Examiners look for the correct definition and a specific, relevant reason; avoid vague answers like "it was good for the economy."