Gresham's law is most applicable to which of the following monetary system?
A) Bimetallism
B) Classical Gold Standard
C) Bretton Woods System
D) Flexible exchange rate regime

Question

Quizplus · Accepted Answer

Gresham's law, which states that "bad money drives out good," is most applicable to a bimetallism system where two metals (e.g., gold and silver) are used as legal tender at a fixed ratio. When the market value of these metals diverges from this legal ratio, the undervalued metal (good money) tends to disappear from circulation as people hoard it or melt it down, leaving the overvalued metal (bad money) in circulation.

Gresham's Law Is Most Applicable to Which of the Following