Gresham's Law states that when different forms of commodity money circulate simultaneously (e.g.,$1 gold coins and $1 silver coins),
A)the one with the more intrinsic ("commodity")value will disappear from circulation
B)the one with the lesser intrinsic ("commodity")value will disappear from circulation
C)both will eventually have to be withdrawn from circulation by the government
D)the resultant disruption in the money markets will cause inflation
E)the resultant disruption in the money markets will cause a recession

Question

Quizplus · Accepted Answer

Gresham's Law posits that "bad money drives out good," meaning that when two forms of commodity money are in circulation, the one with higher intrinsic value will be hoarded or melted down, leaving the less valuable one in circulation.

Gresham's Law States That When Different Forms of Commodity Money