What is an example of Gresham's law?

If there are two forms of commodity money in circulation, which are accepted by law as having similar face value, the more valuable commodity will gradually disappear from circulation. This is an example of Gresham’s law. You can read about the Monetary System – Types of Monetary System (Commodity, Commodity-Based, Fiat Money) in the given link.

The law was named in 1860 by economist Henry Dunning Macleod after Sir Thomas Gresham, who was a financier during the Tudor dynasty. A monetary principle stating that bad money drives out good is Gresham’s law.

Further readings:

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

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