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Gresham’s Law states that
1. One potential drawback of the gold standard is that:
2. Comparative advantage (Points: 10)
3. Gresham’s Law states that (Points: 10)
4. The theory of comparative advantage (Points: 10)
6. The bid price is the price at which a dealer is willing to buy investment security, currency, etc.
7. Which of the combinations of the following options are internally consistent (i.e., both positions would be profitable or unprofitable at the same time)? (Points: 10)
8. How are international finance and domestic finance different?
9. The eurozone is similar to the United States in terms of population, even though the gross domestic product (GDP) is less. (Points : 10)
10. The G-7 is composed of (Points: 10)
Example.
According to Gresham's law, any circulating currency containing both "good" and "bad" money becomes dominated by the "bad" money, which people must accept at the same value under legal tender law. People who spend money will keep the "good" coins and give away the "bad" ones. Laws governing legal tender regulate prices in some way. In such a scenario, people would rather save money than exchange the artificially devalued currency, which they actually value higher, so the artificially overvalued currency is preferred as an exchange. Consider a customer who owns multiple silver sixpence coins but is purchasing a product that costs five pence. While some of these coins are more debased than others, they are all legally required to be of equal value. The customer gives the shopkeeper the most debased coin because they want to keep the better ones.
