Category: Exam Questions

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Exam Questions Harvard Theory

Harvard. Graduate Economic Theory Exam. November 1960

This particular addition to the series of written economic theory exams in the Harvard graduate program reveals that in 1960 aspiring economics Ph.D. candidates were still expected to know something about what Ricardo, Malthus, and Marx thought. Somewhat amusing is the reference to the “so-called Cobb-Douglas production function”. As opposed to what might we ask … “Chuck & Paul’s neat little production function”?

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Harvard Written Exams
in Economic Theory
Posted Earlier

April 11, 1961
April 10, 1962
November 13, 1962
April 8, 1963

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PLEASE WRITE LEGIBLY

HARVARD UNIVERSITY
Department of Economics

Written Examination
in Economic Theory
November 3, 1960

PART I
Two hours

Answer all the questions.

  1. Discuss the arguments for or against Say’s Law advanced by Ricardo, Malthus, Marx, and Keynes. Synthesize.
  2. “The equilibrium concept is meaningful only in the context of a dynamic theory.” Discuss that proposition, illustrating your argument with specific examples.
  3. Describe the general theoretical properties of the so-called Cobb-Douglas production function. Explain its use (a) in the analysis of income distribution, and (b) in the analysis of technological change.
  4. Under what assumptions with respect to the flexibility of prices, the shape of the investment demand function, and the shape of the demand for money function will a “liquidity preference” theory of interest lead to the same result as a “neo-classical” theory of interest?
PART II
Two hours

Answer three out of five questions.

  1. “The subjective value theory of Jevons and the Austrians diverted economics from the classical tradition to which it returned only in recent years.” Discuss the validity of this statement.
  2. Describe the meaning and the significance of the so-called “duality theorem” of linear programming when it is interpreted in terms of economic analysis.
  3. Can a price ceiling imposed on the production of a monopolist induce him to produce and sell (a) a smaller or (b) a larger amount than that he would have produced and sold without such limitation? Explain your answer for either case.
  4. Give a theoretical explanation of the demand for labor (i.e., of the number of workers hired) by (a) an enterprise which pays its workers hourly wages, and (b) an enterprise which remunerates its workers on the straight piece-work basis.
  5. Economists frequently despair of the possibility of measuring the stock of capital, but do not raise similar problems with respect to measurement of the stock of labor or real output. Discuss.

PLEASE RETURN THIS EXAMINATION PAPER WITH YOUR BLUEBOOK.

Source: Duke University. Economists’ Papers Archive. David M. Rubenstein Rare Book & Manuscript Library. Edward H. Chamberlin Papers, Box 17, Folder “Economics Department 1960-62”.

Image Source: Original black and white images from Amherst College, Digital Collections. Amherst College Yearbook, Olio1926: Charles W. Cobb on p. 34; Paul H. Douglas on p. 36. Colorized at Economics by Economics in the Rear-view Mirror.

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Chicago Exam Questions Microeconomics

Chicago. Price Theory Core Examination. Summer 1962

What would your reaction be to the remark in your exam “Remember that you are writing an examination in economic theory”? But, hey, Chicago, you do you.

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Chicago Price Theory
Preliminary/Core Exams
Previously Posted

Summer 1949
Summer 1951
Summer 1952
Winter 1955
Summer 1955
Winter 1957
Winter 1958
Summer 1960
Winter 1961
Winter 1963
Winter 1964
Winter 1965
Winter 1969
Summer 1975

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CORE EXAMINATION
Theory
Summer 1962

Preliminary Examination for the Ph.D. and A. M. Degrees

WRITE THE FOLLOWING INFORMATION ON YOUR EXAMINATION PAPER:

Your Code Number and NOT your name
Name of Examination
Date of Examination

Results of the examination will be sent to you by letter.

Answer all questions. Time: 3 hours. The suggested times for the various questions are guides to their weights in the grading.

  1. (60 minutes) True-False. State very briefly the reason for your answer to each question.
    1. The cross-elasticity of demand of left shoes with respect to the price of right shoes is zero.
    2. A competitive firm buying electrical equipment was not injured by the collusion of the producers (General Electric case) even if the collusion raised prices above the competitive level.
    3. If a consumer’s income rises in the same proportion as a Laspeyres index of his cost of living, his real income is rising.
    4. Duopolists with different costs cannot achieve a monopoly price without transfer payments between the firms.
    5. The marginal utility of income is not constant for a worker who increases his hours of work when the wage rate rises.
    6. If two goods are substitutes in consumption, a 10 cent fall in the price of either good will lead to the same increase in the consumption of the other good.
    7. A minimum wage law may increase the demand for labor by some firms.
    8. A competitive firm will have a more elastic demand function for a factor of production than a monopsonist.
    9. If a firm is operating in the region of falling marginal costs it must be making losses, since marginal cost is then less than average cost.
    10. A multiplant firm will schedule its output so that marginal costs are equal in all plants.
  2. (30 minutes) The stock market break of May 28 elicited many explanations. Comment upon the relevance of each of the following explanations.
    1. Stock prices had previously been too high.
    2. There was a holding back by big buyers.
    3. Inflation was no longer feared.
    4. Sellers became panic-stricken.
    5. The gold outflow, it was feared, would lead to exchange controls.

Remember that you are writing an examination in economic theory.

  1. (30 minutes) Capital formation may be defined as the use of current resources in such a way as to increase future income, and on this definition capital formation includes investments in equipment, human beings, and discovery of new knowledge. Discuss the problem of the meaning of the marginal product of capital, and whether capital as defined is subject to diminishing returns.
  2. (20 minutes) Each firm in an industry is given a license to operate, and no new firms are allowed to enter. The value of a license rises over time — does this prove that firms operate subject to diseconomies of scale?
  3. (40 minutes) It appears that the Federal Communications Commission will be given the power to compel manufacturers of television sets to build them in such a way that they will receive ultra-high frequency broadcasts (at an additional cost of about $25 per set). Then every community can have (say) a dozen channels. Will consumers be benefitted?

Source: Harvard University Archives. Papers of Zvi Griliches. Box 129. Folder “Preliminary Examinations, 1957-1965”.

Image Source: The School of Chicago (1972) as drawn by Roger Vaughan.

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Exam Questions Money and Banking UCLA

UCLA. PhD Qualifying Exam, Money. May 1980

This post adds a fourth Ph.D. qualifying exam for the field of monetary economics at UCLA found in the papers of Robert W. Clower at the Economists’ Papers Archive at Duke University. 

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UCLA Qualifying Exams, Money
Previously posted

May 1971
May 1973
May 1974

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Ph.D. Qualifying Examination
Four Hours

MONEY

Spring Quarter 1980
May 19, 1980

INSTRUCTIONS: Answer all of the following eight questions. Be as specific and concise as possible. There is plenty of writing time to answer all of the questions satisfactorily, so try to spend some time thinking about each question before beginning to write an answer to it. Irrelevant material presented, however correct it may be, will be penalized.

  1. —
    1. Outline a proof of Patinkin’s proposition that real balances are indeterminate under a classical dichotomy between real and monetary sectors.
    2. Why is the proof inappropriate in a classical money economy, one with competitive banking and convertibility of paper money into a real commodity?
  2. —
    1. What special problem(s) does a limited horizon create for an inconvertible paper money system in which the money supplier is not committed to retire the issue?
    2. If we assume an unlimited horizon (a positive probability that the economy will last forever) do some problems still remain? If so, could governmental suppliers of money avoid such problems? Could a private money supplier?
  3. —
    1. What is the statically optimal rate of inflation in a competitive economy with a noninterest-bearing fiat money?
    2. Would you recommend adoption of this rate of inflation as a long-run policy guideline for the U.S. economy? Explain.
  4. In the standard Walrasian model of General Equilibrium an efficient allocation of resources is achieved without the use of any device called “money.” Yet the introduction and use of money is usually presumed to generate economic gains. How would you resolve this apparent conflict? Be specific in defining what you think “money” is and in identifying possible sources of economic gains.
  5. On the basis of arguments by Mickey Mouse and other leading economists, Congress in 1980 terminated all open-market operations by the Federal Reserve System and declared fine tuning through the use of monetary policy to be the moral equivalent of aggravated assault. Discuss the probable implications of this action for
    1. The rate of inflation
    2. Rates of interest
    3. Unemployment
    4. Government expenditure during the decade of the 1980’s.
  6. A few years ago an economist wrote a letter to the Wall Street Journal complaining that much discussion of how to control inflation was based on a neo-quantity theory that emphasized “the quantity of money” but ignored “the quality of credit.” The Federal Reserve System was established, he noted, to regulate commercial bank assets, but current discussion (and policy) concentrated on the liability side of the commercial bank balance sheet and entirely ignored the asset side. The economist maintained that if, for example, commercial banks were forced to limit their lending activity to short-term, self-liquidating business loans, as initially contemplated in the Federal Reserve Act of 1913, inflation would quickly be controlled. Evaluate this argument.
  7. When bank credit cards were initially spreading through the U.S., many people argued that their use would contribute to inflation because retailers would pass on — through higher prices — the charges that they had to pay to banks for credit sales. Some people argued, however, that prices would fall because the use of credit cards would reduce overall transactions costs. Yet others argued that prices might rise or fall, depending upon the precise effects of the use of such cards upon sales volumes and upon the velocity of money. Critically assess each of these arguments.
  8. It is customary for economic theorists to distinguish in their work between “barter” and “monetary” economies, and also between “value theory” and “monetary theory.”
    1. On what basis are these distinctions made (give specific references to the literature if you can)?
    2. Do you believe the distinctions are useful? If so, explain why; if not, explain why not.

Source: Duke University. Economists’ Papers Archive. David M. Rubenstein Rare Book & Manuscript Library. Robert W. Clower papers, Box 4, Folder “Monetary Economics PhD exams. Reading list, exams UCLA 1971-1988”.

 

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Agricultural Economics Exam Questions Harvard

Harvard. Final Exam for Economics of Agriculture. Carver, 1908-1909

 

In 1911 Harvard economics professor Thomas Nixon Carver published a textbook Principles of Rural Economics  that undoubtedly encompassed the content of his course on agricutural economics first taught in 1903-04. Carver’s book is prefaced with an eight page bibliography.

The eight question final exam for this semester course from 1908-09 is found below.

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Earlier material

ca. 1904 Problem set
1903-04 Final exam
1905-06 Final exam

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Course Enrollment
1908-09

Economics 23 2hf. Professor Carver. — Economics of Agriculture, with special reference to American conditions.

Total 25: 2 Graduates, 10 Seniors, 7 Juniors, 4 Sophomores, 2 Others.

Source: Harvard University. Report of the President of Harvard College, 1908-1909, p. 68.

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Course Description
1908-09

[Economics]23 2hf. Economics of Agriculture, with special reference to American conditions. Half-course (second half-year). Tu., Th., at 2.30. Professor Carver.

A study of the relation of agriculture to the whole industrial system, the relative importance of rural and urban economics, the conditions of rural life in different parts of the United States, the forms of land tenure and methods of rent payment, the comparative merits of large and small holdings, the status and wages of farm labor, the influence of farm machinery, farmers’ organizations, the marketing and distribution of farm products, agricultural credit, the policy of the government toward agriculture, and the probable future of American agriculture.

Source: Official Register of Harvard University, Vol. V, No. 19
(1 June 1908). History and Political Science Comprising the Departments of History and Government, and Economics, 1908-09, p. 56.

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ECONOMICS 23
Year-end Examination, 1908-09

  1. Into what periods would you divide the agricultural history of the United States, and what are the leading characteristics of each period?
  2. What are the chief reasons for the fact that the urban population of the United States is growing more rapidly than the rural population?
  3. Does the law of diminishing returns as applied to agriculture give rise to national problems different from those to which it gives rise in manufacturing? Explain.
  4. Discuss the question: Is further immigration desirable in the interests of American agriculture? State clearly the point of view from which you approach the question.
  5. What agricultural improvements do you associate with the following names: Townsend, Bakewell, Robert Colling, Benjamin Tompkins, Jethro Wood.
  6. What are the chief difficulties in the way of the organization of farmers and farming interests?
  7. What, in your opinion, are the most important things now being done for agriculture by the Federal Government of the United States?
  8. State briefly the chief advantages of large-scale farming; also of small-scale farming.

Source: Harvard University Archives. Harvard University, Examination Papers, 1873-1915. Box 8, Bound vol. Examination Papers 1908-09; Papers Set for Final Examinations in History, Government, Economics,…,Music in Harvard College (June, 1909), p. 51.

Image Source: “Picking cranberries.” Card. [ca. 1850–2001]. Digital Commonwealth, https://ark.digitalcommonwealth.org/ark:/50959/fx71c322q  (accessed June 02, 2025).

Categories
Exam Questions Harvard Theory

Harvard. Graduate Economic Theory Exam. April 1962

These posts are unlikely to threaten the popularity of Wordle, but letting graduate prelim exams in economics of yore test one’s wits or perhaps amuse by their presumption is possibly a better use of time for anyone from wannabe economist to crusty old emerita/us in the field.

So with little ado, Economics in the Rear-view Mirror adds Harvard’s April 1962 graduate exam in economic theory to its collection of artifacts. 

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Other Harvard Written Exams
in Economic Theory

April 11, 1961
November 13, 1962
April 8, 1963

_____________________________

PLEASE HAND IN THE EXAMINATION TEXT WITH YOUR BLUEBOOK
HARVARD UNIVERSITY
Department of Economics
WRITE LEGIBLY

Written Examination
in Economic Theory
April 10, 1962

All students must answer Part I; choose four questions from Part II.

Part I (one hour)

State whether each of FOUR of the following statements is true or false, justifying your answer in each case:

  1. The principle that a firm is maximizing its profits when marginal cost equals marginal revenue does not apply to oligopolistic firms.
  2. If a firm’s average cost curve in always decreasing, that firm will lose money if it sets its price equal to its marginal cost.
  3. If the price of a commodity rises, the demand for that commodity may rise too and the quantity offered for sale may fall.
  4. If production of the purely competitive firm is subject to constant returns to scale, a firm will not be minimizing cost unless it is producing in the range where every factor is subject to non-increasing returns.
  5. If a monopolist sells in two separated markets with different demand curves, in order to maximize his profits he must charge a lower price in the market where the elasticity of demand is lower in absolute value.

Part II (three hours)

  1. Keynes stated that from a policy viewpoint everything that can be done by money wage cuts can be done more effectively through monetary policy.
    1. Is this statement compatible with the theoretical framework of the General Theory?
    2. If a Haberler-Pigou-Patinkin real balances effect was of significant quantitative importance, would this change your conclusions about the two policies?
  2. Discuss the relative merits of financing a new superhighway by tolls or by gasoline taxes.
  3. “The theory of the competitive market system’s pricing of all products, allocation of resources, and distribution of income through payments for the factors of production, seemed to many nineteenth-century economists the main part of all economic theory, because it seemed to best demonstrate the desirability of the liberal, competitive regime.”
    Discuss the implications and validity of the statement, and support your points by considering as cases any two (your own choices) of the “many” theorists presumably referred to.
  4. Using a two commodity model, show that, with independence of utilities and an assumption of diminishing marginal utility for each good, there can be no “inferior” good.
  5. In different contexts the Stockholm school, exemplified by Ohlin, and post-war economists like Harrod have proposed theories of the dynamic instability of economies. Sketch these two types of theory with particular emphasis on the differences between them.
  6. Would there be time preference or waiting in a static state? A “marginal productivity” of capital? Liquidity preference? Interest? Discuss the issues in each case. Be sure your own answers are consistent with each other.
  7. The possibility of “excess capacity” under monopolistic competition has been vigorously defended and categorically denied. State and defend your own views, with some discussion of both sides of the question.

Source: Duke University. Economists’ Papers Archive. David M. Rubenstein Rare Book & Manuscript Library. Edward H. Chamberlin Papers, Box 17, Folder “Economics Department 1960-62”.

Source: Harvard University. From the cover of the Class Album 1946.

Categories
Chicago Exam Questions Microeconomics

Chicago. Preliminary Graduate Examination in Economic Theory. Winter Quarter, 1961

Detail of Friedman and Stigler in Vaughan's "The School of Chicago 1972"

Two things perhaps worth noting for this post. (1) The winter 1961 examination is for Economic Theory. The title of the prelim exam only morphs to Price Theory in the 1962-63 academic year, coinciding with the publication of Milton Friedman’s text “Price Theory: A Provisional Text”; (2) this exam has one, and only one, equation:

q = 100 – p.

Sputnik was lauched less than four years before these questions were written. While economic theory had not yet attained the status of “rocket-science” in 1961, let’s not fool ourselves, this is an exam designed to make or break character!

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Chicago Price Theory
Preliminary/Core Exams
Previously Posted

Summer 1949
Summer 1951
Summer 1952
Winter 1955
Summer 1955
Winter 1957
Winter 1958
Summer 1960
Winter 1963
Winter 1964
Winter 1965
Winter 1969
Summer 1975

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CORE EXAMINATION
ECONOMIC THEORY
Winter 1961

Preliminary Examination for the Ph. D. and A.M. Degrees

WRITE THE FOLLOWING INFORMATION ON YOUR EXAMINATION PAPER:

Your Code Number and NOT your name
Name of Examination
Date of Examination

Results of the examination will be sent to you by letter.

Answer all questions. Time 3 hours.

  1. (1 hour) Answer each question “true” or “false” and explain your answer very briefly.
    1. It is a tautology that the average costs of all firms are equal in equilibrium in a competitive industry.
    2. A cartel which allows its members to buy and sell output quotas will have a larger net profit for all firms combined than one which does not.
    3. Since all firms in a competitive industry have the same marginal costs, it is meaningless to speak of more and less efficient firms.
    4. A fall in the price of houses will increase the sales of doorbells; a fall in the price of doorbells will not increase the sales of houses; therefore Slutsky’s equation is wrong.
    5. The average size of farm has risen in recent decades in the United States and Canada. This shows that the farm enterprise is typically subject to increasing returns to scale.
    6. A specialized machine has a life of 5 years. Total returns to it in periods of less than 5 years are quasi-rents.
    7. Assume that the world demand elasticity for tin is -2, and that Bolivia produces 1/3 of the world’s tin. Therefore, the elasticity of demand for Bolivia tin is at most -6. 0.
    8. If factors of production are used in absolutely fixed proportion in the production of a particular product, the demand for each of the factors by the producers of the product will be completely inelastic with respect to price.
    9. A supply curve is a curve displaying the quantities which will be supplied at all possible prices. It follows that there is no supply curve under monopoly.
    10. If a firm is operating in the region of falling marginal costs, it must be making losses because marginal cost is then less than average cost.
  1. (40 minutes)
    1. The long run demand function for a commodity is
      q = 100 – p. The price has been $30 for several years; it now drops to $20. Half the consumers react to the new price immediately; the other half (due to habit, etc.) do not adapt until a year later. Calculate the elasticity of demand at a price of $20 (1) the first year, and (2) the second year after the price reduction.
    2. A consumer assures you that his indifference curves intersect each other. You have an unlimited number of observations on his purchases at various incomes and prices. What tests can you make of the alleged intersections?

III. (40 minutes)

    1. It has often been suggested that the demand for a durable good could be increased if “something were done about the large number of used items on the market” The practical suggestions usually are (1) a government regulation forbidding the use of items older than some specified age, e.g. declaring all pre-1950 cars as “unsafe” and withholding license plates from them or (2) “the manufacturers should buy up the used items and destroy them or export them at a loss. [sic, closing quotation marks missing in original] Discuss the consequences of these two types of policies on (a) the demand for new durable equipment and (b) the profitability to the industry of the two policies.

IV. (40 minutes)

    1. “The first impact of this policy (tight money) is the higher interest rate. Plainly the impact of this will be very different on a firm that has control over its prices and hence can pass along this higher cost as compared with the firm whose prices are given and which, accordingly, must bear the cost itself. The point need not be labored.
      “The U.S. Steel Corporation justified its price increase of 2 weeks ago by the contention that its cost had risen. In doing so it not only conceded its ability to pass higher costs, including higher interest charges, to the consumer but based its policy on the need to do so. But no such opportunity is open to the farmer or to the smaller businessman. They cannot raise their prices, for they are market-determined. They shoulder themselves the costs of this policy.”
      Analyze and evaluate this statement. Disregard the peculiar problems of monetary policy. Treat it as a question about the differential impact of a change in any factor price on a competitive firm or industry as against the impact on a monopolistic firm. Does a change in factor cost “hurt” less in one case than in the other? What do you understand by “passing the cost on to the consumer” and how does the distinction between a monopoly and a competitive industry affect this? Assume the same cost curves and the same shifts in both cases.

Source: Harvard University Archives. Papers of Zvi Griliches. Box 129, Folder “Preliminary Examinations, 1957-1965.”

Image Source: Roger Vaughan’s classic drawing “The School of Chicago 1972”.

Categories
Columbia Exam Questions Germany

Columbia. German language exam to satisfy the economics foreign language requirement. Kullmer, 1966

An economics graduate student hoping to pass the German language exam at Columbia in 1966 was required to translate the following one page selected from an article published in German in 1965. Or perhaps the student was expected to read the article and then answer questions posed by the examiner to test the reading comprehension?

Lore Kullmer (née Poschmann, b. 1919; d. 2011) translated Richard Musgrave’s The Theory of Public Finance into German. Shortly thereafter (1967) she was called to an economics professorship at the University of Regensburg.

Columbia. Allowing math to substitute for second foreign language, 1950

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GERMAN LANGUAGE EXAM
February 1966

DIE PRAKTISCHE BEDEUTUNG DER
STEUERPROGRESSION FÜR DIE GRÖSSE DER
AUFKOMMENSELASTIZITÄT EINER STEUER

Bemerkungen zu Ausführungen R. A. Musgraves
in seiner „Theory of Public Finance“
von
LORE KULLMER*

Kompensatorische Effekte zur Beseitigung von Störungen des wirtschaftlichen Gleichgewichts im privaten Sektor lassen sich u.a. durch die Anwendung des finanzpolitischen Instrumentariums, d.h. konkret durch Änderung des Steuer- und Ausgabenparameter, erzielen. Allerdings erfordert der Zeitbedarf einer mittels diskretionärer Maßnahmen durchgeführten Stabilisierungspolitik ein genügend langsames Fortschreiten der autonomen Änderungen der zu beeinflussenden Faktoren, wenn die Maßnahmen im gewünschten Sinne wirken sollen. Es sind Situationen denkbar in denen eine wirksame Stabilisierungspolitik mit diskretionären Maßnahmen nicht möglich erscheint und jeder Versuch dazu die Abweichungen von Gleichgewichtseinkommen nur ungenügend verringert oder u.U. sogar verstärkt. Hinzu kommt, dass in bestimmten Fällen die Variation finanzpolitischer Maßnahmen überhaupt nicht (oder nicht im notwendigen Umfang) vorgenommen werden kann und/oder sich aus politisch/psychologischen Gründen die häufige Änderung von Steuer- und Ausgabenparametern verbietet.

Die Erkenntnis dieser Zusammenhänge hat die bei entsprechender Ausgestaltung der Instrumente des Finanzsystems in gewissen Umfang vorhandene automatische und unverzüglich wirkende Reagibilität auf Schwankungen des Volkseinkommens im Sinne einer Milderung dieser Schwankungen in den Mittelpunkt des Interesses gerückt und den Ausbau dieses Instrumentariums attraktiv erscheinen lassen.

Der Umfang dieser als built-in flexibility der Budgetgrößen bezeichneten Reagibilität (d.h. die Größe der Anpassung des Aufkommens bestimmter Steuern und der Adaptierung bestimmter Ausgabenverpflichtungen der öffentlichen Hand) kann — von statistischen Daten ausgehend — als Verhältnis der Schwankungen des Finanzsystems zu den Schwankungen des Volkseinkommens gemessen werden.

[Original Source: Public Finance Vol. 20(1965), 1/2, pp. 137-149]

Source: Columbia University Libraries, Manuscript Collections. Columbia University Department of Economics Collection. Carl Shoup Materials. Box 11, Folder “Economics — Memoranda”.

Categories
Exam Questions Money and Banking UCLA

UCLA. PhD Qualifying Exam, Money. May 1974

This post adds a third Ph.D. qualifying exam for the field of monetary economics at UCLA found in the papers of Robert W. Clower at the Economists’ Papers Archive at Duke University. 

In other news, the U.S. House Committee on the Judiciary was between its first (May 9) and second (July 24) days of hearings regarding the impeachment of Richard Nixon.

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UCLA Qualifying Exams, Money
Previously posted

May 1971
May 1973

_____________________________

Spring Quarter 1974
May 24, 1974

Ph.D. Qualifying Examination
MONEY

Four Hours

INSTRUCTIONS: Answer all of the following eight questions. Be as specific and rigorous as possible. There is plenty of writing time to answer all of the questions satisfactorily so try to spend a sufficient amount of time thinking before beginning to write. Irrelevant material presented, however correct, will be penalized.

  1. State whether each of the following statements Is true, false, or uncertain and then briefly explain your answer. Your grade depends entirely upon your explanation.
    1. In countries which undergo frequent, large changes in the rate of monetary growth, changes in the rate of monetary growth have little impact on real income compared to the effect those changes would have had had monetary growth been more stable.
    2. No great error is introduced into the analysis of aggregate demand by assuming that the real income elasticity of the demand for money is unity for short-term fluctuations.
    3. Lags in the adjustment of the rate of inflation to changes in the rate of growth of the money supply imply a cyclical adjustment of the rate of inflation.
    4. If governments do not intervene, floating exchange rates imply a zero balance of payments deficit on the liquidity basis.
    5. A lag in adjustment of the rate at which banks pay interest on demand deposits implies a larger short-run than long-run effect on aggregate demand from equal changes in government spending and borrowing.
    6. If all wage contracts had escalator clauses (i.e., were tied to the price level), inflation would be self-perpetuating.
  2. According to a well-known principles textbook: “The general price level usually rises when GNP is high relative to the physical productive capacity of the economy; similarly, prices generally decline when GNP is low relative to capacity, as during the 1930’s.” In fact, wholesale prices in the U.S. declined almost 50% between 1869 and 1890 although output was generally high relative to capacity during most of this period; and wholesale prices rose nearly 50% between 1932 and 1938 although unemployment during these years ranged between 17% and 25% of the labor force.
    Suppose a diligent student in a class you are teaching confronts you with the quotation and the facts above, How would you answer?
  3. An economist recently wrote a letter to the Wall Street Journal complaining that much discussion of how to control Inflation has been based on a neo-quantity theory which emphasizes the “quantity of money” while ignoring the “quality of credit.” Central banks (he noted) have been established to regulate commercial bank assets, but current discussion and policy concentrates on the liability side of the commercial bank balance sheet and entirely ignores the asset side. He maintained that if, for example, commercial banks were forced to limit their lending activity to short-term, self-liquidating business loans, inflation would quickly be controlled. What do you think of this argument? Explain in detail.
  4. “Only real magnitudes appear as arguments in individual utility functions; accordingly, the rate of inflation of money prices (a strictly nominal phenomenon) is of no welfare significance for individuals or for society at large.” Discuss critically.
  5. A recent Wall Street Journal article noted the rapid rise both in the level of short-term interest rates and in the rate of growth of money that has occurred over the past few months. The reporter explained this phenomenon by asserting that individuals in the money market took the increase in the rate of growth of money as an indication that the Fed would later have to tighten up and therefore bid up interest rates in anticipation of this. Carefully evaluate this explanation and, if you disagree with it, present an alternative explanation.
  1. The recent rise in short-term interest rates has led to much talk about financial disintermediation.
    1. Describe this process of “disintermediation.”
    2. What is the effect of “disintermediation” on the rate of growth of money?
    3. What are the socially harmful effects of such “disintermediation?”
    4. What changes in financial institutional arrangements would you suggest to prevent such “disintermediation” from occurring?
  2. The Panamanian monetary unity is the same as that of the United States, and the circulating medium consists of U.S. coins and paper dollars. The Panamanian government cannot issue currency (it does mint coins, but this can be neglected from this problem), nor does Panama have a central bank. What monetary and fiscal tools would be available to the Panamanian Minister of Economics? What contracyclical policies are possible under what conditions?
  3. There has been much discussion recently of the effects of international conditions on domestic inflation. Discuss the effects of each of the following foreign factors on the U.S. inflation rate, making explicit any assumptions you are using in your analysis.
    1. a world-wide boom
    2. a Russian wheat failure
    3. an Arab oil boycott

Source: Duke University. Economists‘ Papers Archive. David M. Rubenstein Rare Book & Manuscript Library. Robert W. Clower papers, Box 4, Folder “Monetary Economics PhD exams. Reading list, exams UCLA 1971-1988”.

Image Source: UCLA Daily Bruin at archive.org.

Categories
Chicago Exam Questions Microeconomics

Chicago. Preliminary Graduate Examination in Economic Theory. Winter Quarter, 1963

 

A necessary condition for becoming a certified Chicago economist is to have cleared the hurdle of the prelim exam for price theory. With this post we fill in a gap in our fine collection of price theory prelims that has now grown to a baker’s dozen (i.e. 13).

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Chicago Price Theory
Preliminary/Core Exams
Previously Posted

Summer 1949
Summer 1951
Summer 1952
Winter 1955
Summer 1955
Winter 1957
Winter 1958
Summer 1960
Winter 1964
Winter 1965
Winter 1969
Summer 1975

____________________

CORE EXAMINATION
Price Theory
Winter 1963

Preliminary Examination for the Ph. D. and A.M. Degrees

WRITE THE FOLLOWING INFORMATION ON YOUR EXAMINATION PAPER:

Your Code Number and NOT your name
Name of Examination
Date of Examination

Results of the examination will be sent to you by letter.

Answer all questions.

Time 3 hours.

  1. (60 points) Indicate whether you believe each of the following statements to be true, false, or uncertain. In each case write a few sentences explaining your answer. Your grade will depend heavily on your explanation.
    1. If the rate of obsolescence is constant over time for each type of capital equipment, a rise in the rate of interest will shorten the optimal life of capital equipment.
    2. If oranges are substitutes for apples, apples are complementary to cheese, and cheese is a substitute for butter, oranges and butter are complements.
    3. If a certain commodity is rationed and subject to price control, and there is a black market price for it, the black market price is the equilibrium price of the commodity in the absence of price control.
    4. Let Σipi1xi1 and Σipi2xi2 be the expenditure of a firm on factors of production per unit of output at two points in time. If Σipi1xi2 > Σipi1xi1 and Σipi2xi1 < Σipi2xi2, the production function of the firm has changed between the two points of time.
    5. A company cannot have a monopoly if its shareholders receive only the normal rate of earnings on their stock in it.
    6. If the production function of an Industry is subject to constant returns to scale, the industry supply curve will be horizontal.
    7. If it were possible to travel backwards as well as forwards in time, everyone would be a millionaire.
    8. The development of better fertilizer will increase the value of farm land.
    9. Manufacturers frequently advertise that their products contain extra ingredients, and they generally succeed in selling “extra-ingredient” products (e.g. Bufferin) at higher prices than “similar” single-ingredient products (e.g. aspirin). This implies that consumers have a diminishing marginal rate of substitution between the ingredients.
    10. The removal of a barrier to competition anywhere in the economy must make society better off.
    11. Given:
        1. a three-product world,
        2. the cross-elasticity of demand of x with respect to the price of z is zero,
        3. the own-price elasticity of demand for x is -1,
        4. y and z are substitutes,
        5. expenditures on X occupy half of consumers’ budgets, expenditures on Y one quarter of consumers’ budgets in the initial situation,

it follows that the own-price elasticity of demand for y is greater than 1.5 in absolute value. (For this question consider all price-elasticities defined to include the substitution effect only.)

      1. The price-elasticity of demand on the part of a competitive industry for a factor of production will be greater, the smaller is the share of that factor of production in the total costs of the industry in question.
      2. If production in industry X (assumed to be competitive) is governed by a Cobb-Douglas production function, then no wage set by the trade union in that industry will produce greater total labor income than any other wage.
      3. A tax of a fixed amount per unit of output, placed upon the product of an industry with constant costs, will necessarily result in a smaller rise in price if that industry is organized (and behaves) as a monopoly than if the industry is competitive.
      4. In an industry employing just two factors of production, the elasticity of demand on the part of that industry for either factor must be less in absolute value than the elasticity of substitution between the two factors in that industry.
  1. (15 points) The University City Art Theater, a motion picture house showing foreign films, has the following price policies: The basic admission price is $1.00 for evening performances and 60 cents in the afternoon. Registered university students are admitted at half price at all times. A member of the University’s economics department has complained that the theater is a discriminating monopolist and should be required by local ordinance to follow a one-price policy. Comment on the desirability of this recommendation.
  2. (25 points)
    1. Industry X is composed of 10 firms, and organized as a cartel. The pricing policy of the cartel is determined by the following rule: each firm will produce one-tenth of the output of the whole industry, and the price set for the final product will be just equal to the marginal cost of production in the firm with the highest marginal cost. Show how you would measure the welfare cost of this arrangement, as compared with a competitive equilibrium.
    2. The firms now merge into a single monopoly firm, the previous 10 firms now becoming 10 divisions of the new company. All ten divisions continue to operate and have the same marginal cost functions as they did when operating separately. Show how you would measure the welfare costs of this new arrangement. Under what circumstances, if any, would these welfare costs be lower than those of case A?
    3. The government now intervenes to break up the monopoly. The same 10 firms as existed in case A are reconstituted; collusion is somehow prevented; and merger is precluded by a requirement that no firm shall expand the total volume of its capital. Assume that the firms begin operating under this new arrangement with each of them having the amount of capital resulting from a long-run equilibrium under case B, and that the firms behave competitively. How would you measure the welfare costs of this arrangement? Under what circumstances, if any, would these welfare costs exceed those measured under case B?

Source: Harvard University Archives. Papers of Zvi Griliches. Box 129, Folder “Preliminary Examinations, 1957-1965.”

Categories
Exam Questions France Germany Harvard History of Economics

Harvard. Exam questions for 19th century French and German economists. Gay, 1908-09

Friedrich Benedict von Hermann (ca. 1850)

Nine Harvard graduate students were registered for Professor Edwin F. Gay’s reading seminar on French and German economists of the 19th century. I’d be very surprised if there were a U.S. department of economics today in which one would find nine graduate students who could read both of those languages. But that was then when it would have beeen difficult to find an economics department with nine graduate students who could handle a second year undergraduate math class of today. 

Incidentally, there was no mid-year final exam for this course included in the printed collection of mid-year final exams in 1908-09.

________________________

Previously offered

1903. Exam for German Economic Thought

1906-07. Exam for 19th century French and German Economics

________________________

Course Enrollment
1908-09

Economics 22. Professor Gay — German and French Economists of the Nineteenth Century.

Total 9: 9 Graduates.

Source: Harvard University. Report of the President of Harvard College, 1908-1909, p. 67.

________________________

Course Description

[Economics] 22. German and French Economists of the Nineteenth Century. Two consecutive evening hours per week, to be arranged with the instructor. Professor Gay.

In this course selections from the works of a number of the more important German and French economists will be read and informally discussed. The influence of the English classical school will be traced, together with the criticism directed against this school by the socialists and the historical economists. Attention will also be given to the question of methods in economic investigation.

A moderate reading knowledge of German and French will of course be necessary.

Source: Official Register of Harvard University, Vol. V, No. 19
(1 June 1908). History and Political Science Comprising the Departments of History and Government, and Economics, 1908-09, p. 51.

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ECONOMICS 22
Year-end Examination, 1908-09

  1. State critically the position of Sismondi, Rodbertus, Bastiat, and Wagner on rent.
  2. Von Thünen and Le Play.
  3. Discuss the German historical school.
  4. (a) Estimate the work of St. Simon, Fourier, Rodbertus, Marx.
    (b) Comment on Wagner’s criticism of Socialism.
  5. Translate and comment on the following passage:—
    „Die wahre und immer neu fliessende Quelle der Vergeltung der Produktivarbeit ist das Einkommen des Käufers, der ihr Produkt für den eigenen Bedarf kauft. Das Kapital des Unternehmers einer technischen Produktion ist daher nur das Mittel, die auf jeder Produktionsstufe erforderliche Arbeit dem Produkt einzuverleiben und dieselbe am Ende dieser Bearbeitung im Produkte zu verkaufen. Es ist in keiner Weise der Fond, aus dem der Lohn bezahlt wird. Dass die Quelle des Lohnes das Kapital der Unternehmer sei, ist nicht blos theoretisch irrig, sondern auch in praktischer Beziehung eine höchst bedenkliche Lehre, weil sie den Arbeiter in der oberflächlichen Ansicht bestärkt, der Unternehmer sei sein Arbeitgeber und von diesem hänge die Höhe seines Lohnes ab.“

Source: Harvard University Archives. Harvard University, Examination Papers, 1873-1915. Box 8, Bound vol. Examination Papers 1908-09; Papers Set for Final Examinations in History, Government, Economics,…,Music in Harvard College (June, 1909), pp. 50-51.

________________________

Cf. Original German Text

„Die wahre und immer neu fliessende Quelle der Vergeltung der Produktivarbeit ist das Einkommen des Käufers, der ihr Produkt für den eigenen Bedarf kauft.
…Das Kapital des Unternehmers einer technischen Produktion ist daher nur das Mittel, die auf jeder Produktionsstufe erforderliche Arbeit dem Produkt einzuverleiben und dieselbe am Ende dieser Bearbeitung im Produkte zu verkaufen…Es ist in keiner Weise der Fond, aus dem der Lohn bezahlt wird.

[two pages later]

…Dass die Quelle des Lohnes das Kapital der Unternehmer sei, ist nicht blos theoretisch irrig, sondern auch in praktischer Beziehung eine höchst bedenkliche Lehre, weil sie den Arbeiter in der oberflächlichen Ansicht bestärkt, der Unternehmer sei sein Arbeitgeber und von diesem hänge die Höhe seines Lohnes ab.“

Source: Staatswirthschaftliche Untersuchungen von Friedrich Benedict Wilhelm von Hermann  (2nd edition, München, 1870), p. 476 and p. 478.

Fun fact: the previous links take us to Allyn A. Young’s copy of Hermann.