question_answer

Demonetisation affected the Indian economy through three different channels. These are potentially -

J.   An aggregate demand shock because it reduce the supply of money and affected private wealth, especially of those holding unaccounted money.

K. An aggregate supply shock to the extent that economic activity relies on cash.

L. An uncertainty shock because economic agents faced imponderables related to the magnitude and duration of the cash shortage and the policy responses.

M. Consumers deferred or reduce discretionary con- sumption.

N. Firms scaled back investments.

Correct code is-

A) All are correct

B) I, K, L are correct

C) M & N are correct

D) K, L, M & N are correct