The concept of 'Gresham's Law' states that: MCQ with Answer and Explanation

The concept of 'Gresham's Law' states that:
A. Only metallic money circulates
B. Paper money always drives out metallic money
C. Good money drives out bad money
D. Bad money drives out good money when both are legal tender at fixed rates
Answer: Option D
Solution (By JKSSB Mock Tests)
Gresham’s Law observes that when two forms of money have the same face value but different intrinsic values, the money with lower intrinsic value (bad money) tends to remain in circulation while the higher-value money (good money) is hoarded or exported.

Discuss this Question (0)

No comments yet. Be the first to start the discussion!

Practice More Economy Set 1 Questions

Question #1
The 'Multilateral Investment Guarantee Agency' provides:
A. export subsidies
B. currency exchange
C. political risk insurance and credit enhancement for foreign investment
D. trade finance

Correct Answer: Option C


Explanation:
MIGA provides political risk insurance to promote foreign direct investment.

This question belongs to: Economy GK Economy Set 1
Question #2
Minimum Alternate Tax is levied on companies that:
A. have no profit
B. are foreign companies
C. pay very low tax due to exemptions and deductions
D. are in special economic zones

Correct Answer: Option C


Explanation:
MAT is imposed on companies whose normal tax liability is low because of exemptions and deductions.

This question belongs to: Economy GK Economy Set 1
Question #3
The 'Special Drawing Right' value is calculated based on a basket of currencies that includes which five currencies?
A. US dollar, euro, yen, pound, rupee
B. US dollar, euro, yen, pound, yuan
C. US dollar, euro, rupee, pound, yen
D. US dollar, euro, franc, pound, yuan

Correct Answer: Option B


Explanation:
The SDR basket comprises US dollar, euro, Chinese yuan, Japanese yen and British pound.

This question belongs to: Economy GK Economy Set 1