Principles of Macroeconomics / Unit 11 MAC 1005 short lesson, about 20 seconds
Gresham's Law
Captions available
The idea
When two kinds of commodity money circulate at the same official value but differ in quality, people spend the poorer and keep the better. This is Gresham's law.
In practice
Where horses settled debts, the lame ones were handed over and the sound ones kept.
Where people slip
The law needs a fixed official rate. Without one, the two trade at different prices.
Your place on the trail
Every lesson rests on earlier ones and opens later ones. Tap any to jump.
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