What are the main limitations of Gresham's law?

Gresham’s law will operate or hold good only if certain conditions are fulfilled, hence they are like limitations of Gresham’s law. The 3 conditions which pose limitations on the Greshmas law are – If the good money is full-bodied legal tender whose face value equals its intrinsic value, if the public is prepared to accept and circulate bad money, and if the total money in circulation, including, both good and bad money, exceeds the actual monetary demand of the public. You can read about the Monetary System – Types of Monetary System (Commodity, Commodity-Based, Fiat Money) in the given link.

Further readings:

  1. Inflation in Economy- Types of Inflation, Inflation Remedies [UPSC Notes]
  2. Indian Economy Notes For UPSC Exam [Download PDFs]

Related Links

RBI – Reserve Bank of India [UPSC Indian Economy Notes]

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Wholesale Price Index (WPI) – Indian Economy Notes

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Fiscal Policy in India – Objectives, Components, Fiscal Consolidation, FRBM Act, 2003

Monetary Policy – Objectives, Roles and Instruments (UPSC Indian Economy)

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