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Harvard. Introductory Economics. Exam questions, 1959-60



In 1948-49 Economics 1 replaced Economics A as the introductory course at Harvard. Really quite striking from today’s perspective are the economic history and history of economics questions from the first term and the Soviet planning questions in the second terms. You really have to be an old comparative economics researcher (or native Russian speaker) to know what “Blat” was.  [See J. Berliner, ‘Blat is higher than Stalin’, Problems of Communism, 3(1), 1954.]


Hour Examination.
October 30, 1959

  1. (10 minutes) Discuss briefly.
    1. Law of diminishing returns.
    2. “Favorable balance of trade.”
    3. English “enclosures.”
    4. Mercantilism
  2. (20 minutes)
    “The concept of a price system is as foreign to the economics of manorialism as the medieval doctrine of usury would be to the money markets of the modern world.”
  3. (20 minutes)
    How did the classical economists attempt to prove that there were economic gains in free trade? By what means did they translate their argument from “real” to “monetary” terms?


Midyear Examination.
January 1960.

(Three hours)

Answer all questions

  1. (45 minutes)
    “The victory of the ‘classical economics’ over mercantilist doctrine in England, was more than anything else, an indication of the appropriateness of the new analysis to the conditions of the Industrial Revolution.”
    Discuss critically, with reference to the following:

    1. an analysis of the “classical” doctrines of growth and distribution;
    2. the areas of conflict between “classical” and mercantilist ideology;
    3. the degree of relevance of the “classical economics” to conditions in the late 18th and early 19th century England.
  2. a) Define briefly the following terms: (15 minutes)
    1. The demand curve for a product
    2. elasticity
    3. marginal cost
    4. market control or power
    5. workable competition

b) Utilizing these and any other relevant concepts, discuss: (60 minutes)

1.  Price and output policy of the firm under pure competition, oligopoly, and monopoly;
2.  Government intervention in the market as exemplified in U.S. agricultural programs and proposals;
3.  The use of government anti-trust policies in improving the functioning of the market system in a less than perfectly competitive economy such as that of the U.S. today.

  1. (60 minutes) The Logic of Say’s Law (supply creates its own demand) led many economists for over 100 years to the conclusion that a general glut was impossible.
    1. How does modern macroeconomic analysis attempt to demonstrate the possibility of a general glut or depression?
    2. Can this modern analysis be used to explain the opposite situation of general excess demand? If so, how?
    3. What explanation can you give of the Great Depression by applying this analysis to specific developments in the late 1920’s and early 1930’s?
    4. What fiscal measures would you have suggested to cure the depression? Explain carefully your reason for each proposal.



Economics I
Midyear Examination Make-up
April 22,1960

(Time: Three hours. Answer ALL questions.)

Question I (60 minutes)

“Markets, whether they be exchanges between primitive tribes where objects are dropped casually on the ground, or the exciting traveling affairs of the Middle Ages, are not the same as ‘the modern market system’.”

  1. What are the major economic differences between a medieval market and a modern market mechanism?
  2. How did the Mercantilist and the classical economists differ in their concepts of the role of the state with respect to the market mechanism and its operation?
  3. To what extent was the “Industrial Revolution” in England related to particular developments in the evolution of a market system?


Question 2 (60 minutes)

Briefly but clearly distinguish between the following pairs of concepts:

  1. marginal propensity to consume and elasticity of demand
  2. national income and national expenditure
  3. savings and investment
  4. market equilibrium and market control
  5. marginal productivity and economic rent
  6. normal profit and monopoly profit
  7. countervailing power and collective bargaining
  8. transfer payments and factor payments
  9. differentiated product and free entry
  10. perfect competition and workable competition


Question 3 (60 minutes)

Compare the characteristics of market structures as seen by Adam Smith with those distinguished by modern economic analysis, in relation to the following:

  1. The specific types of market structure which have developed, and the nature of the control of the individual firm with respect to its price, output, and profit.
  2. The case for intervention, by the present-day U.S. government, in
    1. particular industrial markets
    2. the agricultural market
    3. the labor market.



Section 4H [or 4II?]

Hour Examination
April 29, 1960


Question 1;
Question 2, or Question 3; and
Question 4, or Question 5, or Question 6. A TOTAL OF THREE

  1. Comment briefly on:
    1. International Monetary Fund
    2. the marginal propensity to import and the foreign trade multiplier
    3. Gosplan
    4. Blat
    5. balance of payments deficit
    6. Soviet turnover tax
  2. Western Germany has in the past been a persistent creditor country. It has been suggested that the resulting imbalance should be remedied by an appreciation of the D-Mark.
    1. Under what circumstances would this policy decision have effective results?
    2. What set of circumstances would make such a decision undesirable?
  3. “Playing the rules of the gold standard involves a loss of freedom to monetary and fiscal authorities.” Explain.
  4. “Although prices may be used in both a planned economy and a price-directed economy, the sharpest distinction between the two can be expressed in terms of the role of prices.” Discuss.
  5. a. What is the essence of central planning? Which are the principal administrative authorities responsible for the various steps in planning in the Soviet Union?
    b. What are the principal sources of inefficiency of Soviet planning?
  6. What are some accelerating and some retarding factors affecting future Soviet Growth?


Final Examination.
May 25, 1960.

(Three hours)
Answer all questions

  1. (30 minutes)
    Explain what is meant by “the problem of creeping inflation.” What is the scope, and what are the limitations, of Federal Reserve policy in its attempt to meet this problem? Are there reasons for believing that mild inflation might be desirable in some respects?
  2. (30 minutes)
    The President’s Report of January 1959 gave the general fiscal objective and expectation of the Federal Government, for the fiscal year 1958-59, as a balanced budget at a level of $77 billion.
    The President’s Report of January 1960 reported that, for the fiscal year 1958-59, the Federal Government had run a deficit of approximately $12.4 billion, tax receipts being $68.3 billion and expenditures being $80.7 billion.

    1. Give a critical analysis of the major factors which tend to make budgetary planning, and fiscal policy, difficult in general, and give an account of some of the influences which threw out the predictions for the 1958-59 period in particular.
    2. What general effect, in your judgment, did the fiscal operations of government have in this period? To what extent was this effect related to deliberate policy decisions taken during the period?
  3. (30 minutes)
    The major alternatives open to the public authorities of a country experiencing a balance of payments deficit include: (a) devaluation, (b) internal deflationary policy, (c) the imposition of tariffs and import quotas.
    What are the principal economic effects associated with each of the above policies? Do you consider any of these policies appropriate for the United States in meeting its present balance of payments difficulties? Explain your answer.
  4. (45 minutes)
    In terms of achieving a rapid rate of growth of priority sectors of its economy, the U.S.S.R. has obtained what, to western economists, is a remarkable degree of success. Most of these economists, however, would distinguish this achievement from “economic efficiency.”

    1. Indicate possible sources of inefficient resource use in the Soviet system, both at the level of the firm and at the level of the higher planning authorities.
    2. Discuss the role of prices in the Soviet system in relation to the problem of an efficient allocation of resources.
  5. (45 minutes)
    “Most of mankind is caught in a vicious circle, in which poverty prevents growth and lack of growth causes poverty. Only by simultaneous, dramatic expansion of all branches of economic activity can an underdeveloped country hope to break out of this vicious circle.”
    Discuss the following, with illustrations taken from one or more underdeveloped countries:

    1. the process by which poverty and lack of growth inter-act to create a vicious circle,
    2. the validity of the contention that, to be effective, growth must be “balanced.”



Source: Harvard University Archives. Department of Economics. Course reading lists, syllabi, and exams 1913-1992 (UA V 349.295.6). Economics 1-Ec 10 exams. Box 1 of 2, Folder “Economics I, Exams 1939-1962”.

Irwin Collier

Posted by: Irwin Collier

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