Money and Banking by Perry Mehring, part 1

Question 1

What are 4 prices of money?

Answer 1

1) Par (price of private money in terms of public money)
2) Interest rate (price of intertemporal exchange)
3) FX rate (price in terms of foreign money)
4) Price level (price in terms of goods)

Question 2

How shadow banks are different from ordinary banks in terms of risk appetite?

Answer 2

Shadow banks tend to hedge interest rate and credit risks away by heavy use of swaps

Question 3

How (1) medium of exchange and (2) unit of value functions of money relate to each other according to Allyn Young?

Answer 3

They are completely indistinguishable - it is impossible to get sense of value of something without actual or hypothetical exchange

Question 4

Why ornament goods has historically been used as money?

Answer 4

Because demand for them is impossible to saturate completely, therefore market for them is more elastic and price is more stable