What will be the impact of Demonetization on the money supply of India???
Is Black Money a part of Money Supply???
Also during Demonetization the money deposited with banks should NoT be a part of DD as it couldnt be withdrawn at will
So as Black Money reduces and also as Liquid Cash gets deposited with Banks (Not in the form of DD) hence money supply should reduce???

Dear student, 
The explanation provided by you is correct. As a result of demonetization the money supply would reduce temporarily. Yes, black money is also a part of total money that is in circulation in the economy. As the money gets deposited in the banks and black money gets curbed the money supply, rather the money in circulation would tend to fall. 

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