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On the Origin of Money
An exercise to develop your understanding of Carl Menger's 'On the Origin of Money'
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What, according to Menger, is the mystery to solve?
2 points
Why do people hoard money?
What assets are the closest substitute for money?
Why people relinquish valuable good and services for items that they do not need?
What causes the money supply to increase?
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How do we define money?
2 points
Unit of account
Medium of exchange
Store of value
Standard of deferred payment
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Ally owns a chicken and wants a pig. Bobby owns a pig but wants a cow. Chris owns a cow but wants a chicken. Is there a mutually advantageous bilateral trade?
2 points
Yes
No
Clear selection
What, according to Menger, restricts Ally from trading their chicken for a cow in order to subsequently trade the cow for a pig?
2 points
In most markets there's a spread between the buying price and the selling price
Preference orderings are unstable
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What example is used for a good with a small price discrepancy?
2 points
Astronomy instruments
Cloth
Corn
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What term does Menger use to refer to the quality of a good that makes us confident that it will be widely accepted at "economic" prices?
2 points
Availability
Economical
Saleability
Value
Clear selection
What do we mean by "economic" prices?
2 points
High selling price
Predictable selling price
Unknowable selling price
Fixed selling price
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What is another way to think about an assets "saleability"?
2 points
It's intrinsic value
It's availability
The ease and certainty of using it in exchange
It's legal legitimacy
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What might Ally, Bobby and Chris exchange their animals for, in order to offer
that
(instead of their animal) in exchange?
2 points
Eggs
A property title
Favours
A promise to pay
Clear selection
What are the origins of money?
2 points
New discoveries of gold and silver
Trading at fixed prices
Trading for more saleable commodities
A collective search for the common interest
Clear selection
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