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The existence of a parallel economy or Black Money
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- makes the economy more competitive
- makes the monetary policies less effective
- ensures a better distribution of income and wealth
- ensures increasing productive investment
- makes the economy more competitive
Correct Option: B
The existence of black money is injurious not just for tax revenues. It distorts the systematic resource allocation process and upsets the accuracy of economic forecasts. Inflation is both a cause as well as a consequence of the black money in our economy. Black money results in the social injustice and fallacy in the economy. The rich gets richer and the poor gets poorer. So the existence of black money erodes the very rationale of growth behind monetary policies.
