WBCS.LIVE practice question

The 'Gresham's Law' in economics is related to which of the following?

Solve this multiple-choice question and check the correct answer with its explanation below.

Answer options

  1. Taxation policy
  2. Circulation of money
  3. International trade
  4. Population growth

Correct answer and explanation

Correct answer: Circulation of money

Explanation: āœ… Correct Answer: B) Circulation of money šŸ“š Explanation: Gresham's Law is an economic principle that states "bad money drives out good." In a system where two types of money are in circulation with the same legal value, the one made of cheaper material (bad money) will circulate, while the one with higher intrinsic value (good money) will be hoarded or melted down. This was observed historically when coins were made of precious metals.