Gresham's Law Flashcards
1
Q
Gresham’s Law
A
An artificially overvalued money tends to drive out an artificially undervalued money out of circulation
2
Q
Why is it important?
A
Grsham’s law states that when liquid, commodity backed money is in circulation, people will hold on to the good money, which is the money that has the same as or more than value then the face value of the currency. Because of this, the currency that takes over circulation will be the overvalued currency that drove out the undervalued currency.
