Question

Why more than a 10000 notes cannot be printed by RBI in order to pay all the credits on the country.

Answer 1

Printing more money will result in hyperinflation(the general price level within an economy rapidly increases as the currency quickly loses real value).If we print more money, prices will rise such that we’re no better off than we were before. To see why, we’ll suppose this isn’t true, and that prices will not increase much when we drastically increase the money supply. . Let’s suppose the Government decides to increase the money supply by mailing every man, woman, and child an envelope full of money. What would people do with that money? Some of that money will be saved, some might go toward paying off debt like credit cards, but most of it will be spent. I know the first thing I’d do is go down to the nearest BMW Dealer an buy a F30 Sedan.