Gresham's Law states that people

Question

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Gresham's Law states that people tend to spend lower-quality money and hoard higher-quality money. This is because the lower-quality money (such as debased currency) is generally worth less than its face value, whereas higher-quality money (such as gold or silver) has intrinsic value and is worth its weight in the commodity. Therefore, people will prefer to hoard the higher-quality money and spend the lower-quality money, leading to the circulation of only lower-quality money in the market.

Gresham's Law States That People