how this decision of modiji to ban of rs.500 and rs.1000 old notes affect the common man

How this ban of Rs.500 and Rs.1000 old notes affect the common man…

WHAT HAPPENED NEXT ????

• People who have a lot of cash, legally earned,

will increase bank’s deposits by a huge margin.

• This will also increase the lending activity

because banks have a CRR (cash reserve ratio)

to maintain and with more deposits they can

do more lending.

• People who have illegally earned this money may be

afraid to deposit it in a bank. There are people with

crores of cash, black money, earned through illegal

ways, such as corruption, smuggling etc. And if they

deposit this money in a bank then question will be put

on them that “how did they make this in first place”.

• This will reduce the total currency circulation in the

economy - leading to deflation.

• Deflation increases the value of money that

we have because the total money supply

goes down but the commodities and things

available in the market have not gone down.

• Real Estate would crash slowly and recover

quickly.

• In the end we just want to say that path is truly risky but it will surely help everyone or beneficial over a period of time.

• We just hope the exchange process should be easy so that it will npt affect the common man.

Thankyou

DMCHALLENGER.COM