Multiple choice

Greshan's law states that

  1. bad money promotes good money in the system

  2. bad money drives good money out of circulation

  3. good money drives bad money out of circulation

  4. good money promotes bad money in the system
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Gresham's Law states that 'bad money drives out good money' - when two forms of money with the same face value but different intrinsic values circulate together, people will spend the money with lower intrinsic value (bad) and hoard the money with higher intrinsic value (good).

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