Read the given passage and answer the questions that follow.

The move by the government to demonetize Rs.500 and Rs.1000 notes by replacing them with new Rs.500 and Rs.2000 notes has taken the country by surprise. The move by the government is to tackle the menace of black money, corruption, terror funding, and fake currency. From a market perspective, we think that this is a very welcome move by the government and which has taken the black money hoarders by surprise. The total value of old Rs.500 and Rs.1000 notes in circulation is to the tune of Rs.14.2 trillion, which is about 85% of the total value of the currency in circulation. This means that the total cash has to now pass through the formal banking channels to get legitimacy. The World Bank in July 2010 estimated the size of the shadow economy for India at 20.7% of the Gross Domestic Product (GDP) in 1999 and rose to 23.2% in 2007. Assuming that this figure has not risen since then (quite unlikely though) and that the cash component of the shadow economy is also proportional (it could be higher), the estimated unaccounted value of the currency could be to the tune of Rs.3.3 trillion. Now, post the announcement of demonetization by the government this money would have to either account for by paying the relevant tax and penalties or would get extinguished. There are higher chances of a larger proportion of this unaccounted currency getting extinguished as the tax rate and subsequent legal issues could be prohibitively high for such money.
This move by the government is likely to have long-term benefits for the economy. The extinguishing of the major proportion of unaccounted currency would reduce the liabilities of the government and would add to its finances. This move is likely to lead to better tax compliance, raise the Tax to GDP ratio and improved tax collection. The move is also likely to have a habit-changing impact on the Indian populous and there could be an increased belief in keeping cash in the banks rather than stashed at home and using formal banking channels for their spending needs. It will improve the medium to long-term Current Account and Savings Account (CASA) ratio of the banks. Another element of the demonetization would be a reduction in cash transactions in real estate which has been acting like a cash cow for the corrupt. This is likely to reduce real estate prices and make it affordable to some extent. This may be visible more in the rural belt, where many non-farming entities purchase fertile farmland, not for farming but for money parking purposes. The demonetization and consequent reduction in the shadow economy would bring the demand for such farmlands down.