Chap002 2 - and is withdrawn from circulation as money...

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4. In the United States, bimetallism was adopted by the Coinage Act of 1792 and remained a legal standard until 1873, A. when Congress dropped the silver dollar from the list of coins to be minted. B. when Congress dropped the twenty-dollar gold piece from the list of coins to be minted. C. when gold from the California gold rush drove silver out of circulation. D. when gold from the California gold rush drove gold out of circulation. 5. The monetary system of bimetallism is unstable. Due to the fluctuation of the commercial value of the metals, A. the metal with a commercial value lower than the currency value tends to be used as metal and is withdrawn from circulation as money (Gresham's Law). B. the metal with a commercial value higher than the currency value tends to be used as money (Gresham's Law). C. the metal with a commercial value higher than the currency value tends to be used as metal
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Unformatted text preview: and is withdrawn from circulation as money (Gresham's Law). D. none of the above 6. In the 1850s the French franc was valued by both gold and silver, under the official French ratio which equated a gold franc to a silver franc 15 times as heavy. At the same time, the gold from newly discovered mines in California poured into the market, depressing the value of gold. As a result, A. the franc effectively became a silver currency. B. the franc effectively became a gold currency. C. silver became overvalued under the French official ratio. D. answers a) and c) are correct 7. Gresham's Law states that A. bad money drives good money out of circulation. B. good money drives bad money out of circulation. C. if a country bases its currency on both gold and silver, at an official exchange rate, it will be the more valuable of the two metals that circulate. D. none of the above....
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