ACirculation of currency
BSupply and demand
CDeficit economy
DNone of these
Answer:
A. Circulation of currency
Read Explanation:
Gresham's Law
Gresham's Law related to currency and monetary policy.
Gresham's Law states: '' Bad money drives out good money.''
In simple terms, when two types of currency are accepted as having equal value, the less valuable or debased currency will circulate more widely, while the more valuable currency will be hoarded or driven out of circulation.
This law was first observed by Sir Thomas Gresham, an English merchant and financier, in the 16th century. It explains how inferior currency can displace superior currency in circulation, leading to economic instability and inflation.
Example include:
Debased coins driving out pure metal coins
Paper money replacing gold or silver - backed currency
Gresham's Law has significant implications for monetary policy, highlighting the importance of maintaining sound currency and preventing debasement.