Which one of the following laws stated that bad money drives out good if their exchange rate is set by law?

Gresham's law

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Gilbert's law

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Keynes' law

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Kuznet's law

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Solution

The correct option is A Gresham's law
Gresham's law is a monetary principle stating that "bad money drives out good". In currency valuation, the law states that if a new coin (bad money) is assigned the same face value as an older coin containing a higher amount of precious metal (good money), then the new coin will be used in circulation while the old coin will be hoarded and will disappear from circulation.

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