The Coinage Act of 1792 set the relative values of silver and gold coins at 15 to 1. Suppose the relative values of silver and gold in the market was 14 to 1. In this case,

Question

The Coinage Act of 1792 set the relative values of silver and gold coins at 15 to 1.  Suppose the relative values of silver and gold in the market was 14 to 1.  In this case,

Quizplus · Accepted Answer

When the market ratio of silver to gold is lower than the mint ratio, silver becomes more valuable in terms of gold than it is officially valued at by the mint. This discrepancy incentivizes people to hoard silver or sell it abroad where it can fetch a higher price in gold, rather than using it as money domestically.

The Coinage Act of 1792 Set the Relative Values of Silver