The Monetary System of Bimetallism Is Unstable

question 2

Multiple Choice

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• A)the metal with a commercial value lower than the currency value tends to be used as metal and is withdrawn from circulation as money (Gresham's Law).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• C)the metal with a commercial value higher than the currency value tends to be used as metal and is withdrawn from circulation as money (Gresham's Law).
• D)none of the above

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Definitions:

Opportunity Costs

Missing out on possible advantages from various alternatives upon deciding on one.

Sunk Cost

A cost that has already been incurred and cannot be recovered or refunded, and thus should not influence future financial decisions.

Book Value

Book value is the net value of a company's assets found on its balance sheet, calculated as total assets minus total liabilities and intangible assets.

After-Tax Salvage

The net value of an asset after subtracting taxes associated with its sale or disposal.