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Swarthmore. Economic Theory Honors Exam Questions by Samuelson. 1943

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Harvard economics alumnus Wolfgang Stolper (Ph.D. 1938)  was able to leverage his friendships and connections from graduate school to obtain a flow of external examiners for Swarthmore College’s honors examinations in economics. For today’s post I have transcribed the examination questions in economic theory provided by Paul Samuelson.

I find particularly interesting the early use by Samuelson of the term “neoclassical synthesis” under which he grouped “Marshall, Walras, Wicksell, Cassel or the Austrians” and that he considered distinct from the later synthesis of “orthodox economic thought” by Hicks.

I have also attached to this post a most delightful artifact, Paul Samuelson’s remembrance sent to the seventieth birthday celebration for James Tobin’s wife, Elizabeth (a.k.a. Bess, Betty) Ringo, who had been a graduate student of Samuelson’s at M.I.T. after having been one of his (probably January) examinees that year at Swarthmore.

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Samuelson’s Remembrance of Being a Swarthmore External Examiner

“Success has a thousand fathers. Failure is an orphan.” John F. Kennedy said that, and so before him did Mussolinis son-in-law. I claim some credit for bringing Bess Ringo to Cambridge and into Jim Tobin’s orbit.

It was Wolfi Stolper who persuaded me to be an external Swarthmore examiner. I never worked a harder weekend. Janet Goodrich and John Chapman, Peter and Freddie Kuh, Bess, and many more were part of that intense honors group. Even the faculty lobbied our Olympian outside group.

No good deed goes unrewarded. My booty from the countryside was Ringo’s promise to come to MIT’s new graduate program in economics, which was starved for draft-proof students. Nuns cannot be trusted except in pairs and to Betty’s indignation we admitted a female from Hunter College to be her buddy.

The rest is history.

Blessed history—for Betty and Jim and theirs have enriched the lives of us happy many.

[signed] Paul Samuelson

Paul Samuelson (and, by proxy, Marion Crawford Samuelson)

1 August 1992

 

Source: Duke University, Rubenstein Library. Papers of Paul A. Samuelson, Box 73, Folder “Tobin, James”

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SWARTHMORE COLLEGE
1943
Department of Economics

 

Honors Examination                       Division of the
Thursday, January 28                     Social Sciences

ECONOMIC THEORY

Examiner: Professor Paul A. Samuelson
Massachusetts Institute of Technology

Answer one question from each of four sections.

Section I

Write an hour essay on one of the following subjects.

  1. The use of a pricing system in a completely planned and socialized society.
  2. The difficulties faced in the classification of monopoly and competition, with a provisional, constructive solution of them.
  3. The significant meanings of the term “exploitation of a factor of production.”
  4. The marginal productivity theory and its difficulties.
  5. The relationship between firms and industry, between cost and supply, in the long and in the short run.
  6. Conflicting views as to the true nature of profit.

Section II

  1. Discuss price determination and allocation of supply between more than one market, under simple and discriminating
  2. “Edgeworth is wrong when he says that Giffen’s Paradox, positively inclined demand curve, is highly unrealistic and not to be found in practice. I have often observed that poor people eat more bread and potatoes than the wealthy, precisely because their income is less.” (Marshall) Comment upon this quotation bringing out the analytical point at issue.
  3. Why is it said that price is indeterminate under oligopoly and duopoly?
  4. Why has the Marshallian concept of consumer’s surplus been under attack? What did it attempt to do and under what conditions was it valid?

Section III

  1. “It is illogical that the Keynesians should speak of a future possibility of inadequate investment relative to saving since they insist on the necessary equality of these magnitudes.” Examine the issue raised here, making reference to other schools of thought. If you dare, attempt a synthesis of divergent theories and definitions.
  2. “Labor is like any other commodity. If its supply is excessive relative to its demand, lower its price and you will clear the market.” Comment.
  3. “I deny the very existence of a business cycle, and challenge anyone to produce evidence of its reality.” Meet this challenge.
  4. “The business cycle is monetary in origin, being nothing more than the ‘dance of the dollar’.” Comment.
  5. “The interest rate is a purely monetary phenomenon.” Comment.

Section IV

  1. Discuss the revolution in population outlook after World War I, and the economic problems raised.
  2. Will our major post-war problem be that of controlling a boom or combating a depression? Defend your stand.
  3. Disillusioned with monetary controls, governments have turned to fiscal policy to combat the business cycle. Give reasons and implications.
  4. When we have solved the problem of unemployed resources, there will arise the necessity to allocate resources in their optimal What are the criteria by which correct decisions are made in this sphere, and how is the perfection of competition involved?

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Professor Paul A. Samuelson
Massachusetts Institute of Technology

SWARTHMORE COLLEGE

            Honors Examination                        May 19, 1943                       Division of the
Department of Economics               Social Sciences

 

ECONOMIC THEORY

Answer one question from each of four sections.

Section I

Write an hour essay on one of the following subjects.

  1. The relationship between firms and industry, between cost and supply, in the long and in the short run, under perfect and imperfect competition.
  2. The scope and method of economics.
  3. We have had at last four syntheses of orthodox economic thought: (a) that of Smith; (b) that of John Stuart Mill; (c) the neo-classical synthesis (Marshall, Walras, Wicksell, Cassel or the Austrians); (d) Hicks. Write a critical contrast of at least two of these.

Section II

  1. Discuss discriminatingly the multitude of meanings of the term “excess capacity.”
  2. What bearing does the use of indifference curves have upon
    1. the problem of the measurability of utility
    2. the definition of complementarity, independence, competitiveness; joint demand and substitutability
    3. Giffen’s paradox and “inferior” goods?
  3. “Since each worker is paid the productivity of the last worker, (marginal productivity), a really smart and unscrupulous employer would hire so many workers as to cause the wage to be zero, or at least only enough above zero to support a physiological minimum of existence.” Comment.

Section III

  1. “Everybody talks about the disparity between saving and investment, but nobody attempts to measure it.” Discuss the theoretical and statistical problems involved here.
  2. “There is an inherent instability in the banking system, and this gives rise to the business cycle which is essentially ‘the dance of the dollar.’” Analyze.
  3. Describe the “multiplier doctrine,” its fields of application, its validity and shortcomings.

Section IV

  1. Weigh the arguments for and against secular stagnation.
  2. Defend or attack the thesis that there will be a post-war boom. Give your characterization of the post-war economy.
  3. “The business cycle is a misnomer; it is a question of many cycles not of one.” Discuss the historical, statistical, and theoretical issues raised by this statement.
  4. Describe the cyclical behavior and importance of
    1. the building industry or
    2. consumers credit and installment institutions.

 

Source: Duke University, Rubenstein Library. Papers of Wolfgang Stolper, Box 22, Folder1.

Image Source: Elizabeth Fay Ringo from Swarthmore’s Halcyon 1943. Paul Samuelson (1940) from M.I.T. Memorial.