Because commodity money is not uniform in quality, there is a tendency
A) for higher quality commodity money to drive lower quality commodity money out of circulation.
B) for lower quality commodity money to drive higher quality commodity money out of circulation.
C) for stable commodity money to drive unstable commodity money out of circulation.
D) for unstable commodity money to drive stable commodity money out of circulation.

Question

Quizplus · Accepted Answer

This is an example of Gresham's Law, which states that "bad money drives out good." People tend to hoard higher quality money and spend lower quality money, leading to the circulation of lower quality commodity money.

Because Commodity Money Is Not Uniform in Quality, There Is