Question

What is Gresham’s Law? Give some specific explanations.

Answer 1

Gresham's law can be defined as a monetary rule which says that that bad money displace good money. In other words it can be said that this law says that if there are two coins are in circulation and the coin whose relative face values differ from their relative coin value, then the coin which has been made by the valuable metal, it will be driven out from the circulation and it will be melted down for use of another purpose.

For example there was silver and gold coin in the old time, so when the new coin which was made by the less valuable metal has appeared and both coins face value was equal. Then the old coins of gold and silver started going out of the circulation due to high metal value of that coins.