Category: Exam Questions

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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

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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.

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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

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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.”

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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.

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Previously offered

1903. Exam for German Economic Thought

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

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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.

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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.

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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.

Categories
Exam Questions Fields International Economics M.I.T.

M.I.T. General Exam for International Economics. May 1974

Charles P. Kindleberger

This general exam from the Spring of 1974 was fished from Charles Kindleberger’s papers in the M.I.T. Archives. Probably the questions in the first part were of Jagdish Bhagwati’s doing and those in the second part were chosen by Kindleberger.

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Previously transcribed and posted
General Exams
for International Economics

1959
February and May 1966

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Previously transcribed and posted
Kindleberger’s Course Exams
for International Economics

1950-51
1954-55
1961-67

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[Handwritten note: “Wednesday May 22, 1974”]

GENERAL EXAMINATION IN INTERNATIONAL ECONOMICS

Three hours.

Part I answer two questions;
Part II answer two questions.

All questions have equal weight (45 minutes each).
Write your answers to Parts I and II in separate books.

Part I

  1. Murray Kemp believes that, with regard to factor price equalization,

“…the conditions never have been nor will be satisfied in practice… Nevertheless, the “factor price equalization theorem is important if only because it focuses attention on the obstacles to equalization.”

What is your opinion about the importance and relevance of the factor price equalization theorem?

  1. What Is the case for free trade?
  2. Assume that the price of oil relative to other goods will continue at its present level for at least the next half decade. What does international trade (and not balance of payments) theory predict about the effects of the price increase on importing countries?

Part II

  1. Describe and evaluate the monetarist explanation of the balance of payments of a single country. If you choose, you may include a discussion of the reasons why this explanation has made progress at the expense of others.
  2. With liberal policies in trade and capital movements and national responsibility for employment and inflation, is the international economic system overdetermined? Discuss in relation to international monetary arrangements on the one hand, and the possibility of giving up policy instrument on the other.
  3. Discuss the balance-of-payments problem, its origin and possible cure of one of the following: Germany, Italy, the United States, any Latin American country you choose, Saudi Arabia, India.

Source: Institute Archives and Special Collections, MIT Libraries. Charles Kindleberger Papers, Box 22, Folder “Examinations International Economics 1959-75”.

Source: Portrait of Charles Poor Kindleberger at the MIT Museum website. Colorized by Economics in the Rear-view Mirror.

Categories
Chicago Exam Questions Microeconomics

Chicago. Preliminary Graduate Examination in Economic Theory. Winter Quarter, 1958

The collection of price theory prelim exams from Chicago here at Economics in the Rear-view Mirror has just grown by another exam. What is particularly noteworthy about the copy that I have just transcribed is that it appears to have been recycled as a problem set sometime later by Zvi Griliches when he taught the second quarter of Chicago price theory, Economics 300b.

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Chicago Price Theory
Preliminary/Core Exams
Previously Posted

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

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Note in pencil at top of page:

30 copies, Griliches Weds. 
300B Griliches Feb. 
take home problems

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ECONOMIC THEORY
Preliminary Examination
for the Ph.D. and A.M. Degrees
Winter Quarter 1958

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 after results on all preliminary examinations have been received.

Answer all questions. Time: Four hours.

Total Points: 240 (Equals number of minutes allowed for the examination.)

  1. (60 points) Develop the major aspects of the theory of a competitive firm, and compare it with the theory of consumer behavior. What are the similarities and the differences between the two theories and the concepts used in each?
  2. (50 points) Analyze briefly each of the following propositions: Marginal productivity analysis…
    1. proves that the existing distribution of income is ethically just;
    2. provides a basis for understanding the demand for factors of production;
    3. is a complete theory of the determination of the prices of production;
    4. provides a basis for understanding the supply of factors of production;
    5. does not apply in the case of fixed proportions.
  3. (50 points) Indicate briefly the meaning of each of the following phrases, identify the economist (or economists) associated with each, and state some of his major contributions to economics:
    1. Engel’s Law
    2. Say’s Law
    3. Iron Law of Wages
    4. Schumpeterian innovators
    5. Conspicuous consumption
    6. Contract curve
    7. Elasticity of demand
  4. (40 points) In calculating whether the government ought to undertake certain investment projects, a rate of interest is frequently used. How in principle would you determine what rate of interest is appropriate?
  5. (40 points) It is argued in connection with the development of underdeveloped countries that basic industries such as steel should be developed by the government, since private investors will neglect the external economies brought to other industries by low-cost steel, and therefore will underinvest. Evaluate this argument. For what general class or classes of cases is the argument correct?

Source: Harvard University Archives. Papers of Zvi Griliches. Box 130. Folder “Preliminary Examinations, 1957-1965”.

Image Source: Social Science Research Building. University of Chicago Photographic Archive, apf2-07490, Special Collections Research Center, University of Chicago Library.

Categories
Exam Questions Harvard Law and Economics

Harvard. Exam for semester course on laws governing industrial relations. Wyman, 1908-1909

Like William Morse Cole’s accounting class, Bruce Wyman’s course on aspects of business law was a relatively popular course taken by undergraduate economics majors at Harvard in the early 20th century.

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From earlier years

1901-02. Autobiographical note for Bruce Wyman, enrollment, course description, syllabus, exams.
1902-03. Wyman Obituary, enrollment, course description, exams.
1903-04. Enrollment and exams.
1904-05. Enrollment, course description, exams.
1905-06. Enrollment, paper assignments, exams.
1906-07. Enrollment, paper topics, exams.
1907-08. Enrollment, exams.

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Course Teaching Assistants
1908-09

Dana Brannan (A.B. Harvard 1905; LL.B. Harvard, 1910).

Brannan went on to become a reporter and ultimately obituary editor for the New York Times. His mother was the prominent suffragist, Eunice Dana Brennan, a daughter of the founder and editor of the New York Sun, Charles A. Dana.

Harries Arthur Mumma (cum laude, A.B. Harvard 1907; LL.B. Harvard 1909).

Mumma went on to teach law at George Washington University and Fordham University before becoming a partner in the New York law firm of Mumma, Crane and Costabell for 40 years.

Source: Harvard University. Quinquennial catalogue of the officers and graduates 1636-1930, pp. 1038-39.

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Course Enrollment
1908-09

Economics 21 1hf. Professor Wyman, assisted by Messrs. Brannan and Mumma. — Principles of Law governing Industrial Relations.

Total 163: 3 Graduates, 103 Seniors, 44 Juniors, 10 Sophomores, 3 Others.

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

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Course Announcement
1908-09

This course along with Economics 18 (Elements of Accounting)
“…is designed more particularly to aid in the understanding of the problems likely to be met in business life, and is arranged with special regard to the needs of those looking to such a career. They are primarily for students who have reached or approached the close of their general education.”

[Economics] 21  1hf. Principles of Law governing Industrial Relations. Half-course (first half-year). Mon., Wed., Fri., at 12. Professor Wyman.

Course 21 is not open to students before their last year of undergraduate work. The course considers certain rules of the law governing the course of modern trade and the organization of modern industry. The problems brought forward are actual and the rules of law discussed are specific, so that the instruction may prove of service in a business career. The course forms a natural introduction to the study of law, as it involves many of the elementary principles. And as the course deals with adjudication and legislation on questions of first importance in the economic development of modern times, it may also be of advantage to all those who wish to equip themselves for the intelligent discussion of issues having both legal and economic aspects. In 1908-09 five principal topics will be discussed: Competition; Combination; Association; Consolidation; Regulation; — some very briefly, some with more detail. The conduct of the course will be by the reading and discussion of cases fromthe law reports which are contained in an edited series of case books.

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. 57.

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ECONOMICS 21
Mid-year Examination, 1908-09

  1. A manufacturer of patent medicine attacks the proprietors of another medicine thus: “They do not dare to publish their formula; our own belief is that it is poisonous; we have known of cases where people have died after taking their medicine, and of other cases where our warnings have been in time and patients have changed over to our medicine and have been entirely cured. We not only say that ours is the best medicine for this disease, but we say further that theirs is the worst. At the same time you pay $1.00 for their concoction, and 50 cents for our medicine.” Would you say there was anything in this advertisement for which suit could be brought?
  2. In a strike for shorter hours a union publishes advertisements requesting men not to take their places, posts a picket of two men near the mill gates, declares that it will not deal with grocers who sell to scabs, and gather at the railroad stations shouting warnings to incoming strike-breakers. For what can their former employer get an injunction?
  3. Would your answers be the same in question 2, if were sympathetic strike, a unionizing strike, a strike for higher wages, or a strike to get an unpopular official discharged?
  4. A combination of oil refiners decides to destroy a small rival so as to get a monopoly of the trade in his district. Accordingly they announce that none of them will sell to any dealer in that district who continues to deal with the rival after their contracts run out, that they will give 25% discount to those who will break their contracts, that to those who are not under contract they will make 12½ % discount, and that they will give 120 days besides to those who have been given any credit by the rival. For what can the small refiner sue the combination?
  5. A manufacturer of matches whose trade extends all over New England sells out his business to the North American Match Company, a monopolizing corporation, to which he agrees not to engage in the match business for ten years within the New England States, not to engage in the chemical business for twenty years east of the Mississippi River, to sell to the North American Match Company at cost plus 10% a year any plants he may establish thereafter in the United States, and to induce his customers to deal with the North American Match Company henceforth. How many of these agreements can the North American Match Company enforce?
  6. The X corporation is organized with capital stock of $100,000, which is sold to its stockholders at discounts averaging 50%. It issues $100,000 debenture bonds, which are sold to the public at discounts averaging 25%. It paid one of its stockholders $100,000 for goods not worth at market quotations over $80,000, and it par one of its directors $100,000 for goods not worth more than $70,000. After a disastrous season the X company fails leaving goods worth only $20,000. How much do the debenture bondholders get?
  7. A corporation organized to run cars, buys lands for its works twice as extensive as it then needs, it buys another tract nearby on which it constructs houses for its workmen, it constructs a foundry to make its own castings, it buys an iron works at a distance to smelt its own ore, the iron works owning great tracts of ore lands. To how much of this can the Attorney-General object as ultra vires?
  8. What arguments may be made against the legality of a combination of corporations in the form of a pool, a trust, a holding corporation, and a consolidating corporation?

Source: Harvard University Archives. Harvard University. Mid-year Examinations, 1852-1943. Box 8, Bound Volume: Examination Papers, Mid-Years 1908-09.

Image Source: Memorial Hall, ca. 1900. Library of Congress Prints and Photographs Division Washington, D.C. 20540.

Categories
Exam Questions Johns Hopkins Macroeconomics Undergraduate

Johns Hopkins. Undergraduate exams for national income and employment. Domar, 1955-1956

Machlup presenting, Domar, in profile, 3rd person to Machlup's right.

The undergraduate course Political Economy 3 (National Income and Employment) at Johns Hopkins was followed by Political Economy 4 (Economic Fluctuations and Fiscal Policy). Both terms of introductory macroeconomics were taught by Evsey Domar in 1955-56.  Class outline, readings, and exams for Political Economy 4 were posted earlier.

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Course Announcement
1955-56

National Income and Employment. 3.  Professor Domar. Three hours weekly, first term.

National income and its composition. The determination of income, employment, and the general price level. A brief treatment of the problem of economic stability and development.

Prerequisite: Political Economy 1.

Source: Johns Hopkins University. Undergraduate Programs, Announcements of Courses 1955-1956 in Circular 1955-1956 Vol. 74, New Series 1955, Number 8, p. 102 [In annual volume of Circulars, p. 746].

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E. D. Domar
November 2, 1955

THE JOHNS HOPKINS UNIVERSITY

NATIONAL INCOME AND EMPLOYMENT
(Political Economy 3)

[FIRST] HOUR EXAMINATION
Fall Term, 1955-56

Answer all questions in any order you like. Indicate carefully each step in your reasoning and computations.

  1. [40%] On the basis of the data given below. compute the following estimates (not necessarily in this order):
      1. Gross national product from the expenditure point of view.
      2. Gross national product from the income point of view.
      3. National income.
      4. Disposable personal income.
      5. Saving and Investment account.

Set up only such auxiliary accounts as you need to prepare these estimates. Be careful to make your results mutually consistent.

Capital consumption allowances (depreciation)

14
Compensation of employees (wages & salaries)

90
Corporate income taxes

10
Dividends (received by consumers)

8
Employer (business) contribution to social insurance

3
Government purchases of goods and services

38
Government transfer payments

6
Gross private domestic investment (capital formation)

25
Indirect business taxes

14
Income of unincorporated enterprises

20
Interest received by consumers from business

3
Interest received by consumers from government (on the public debt)

3
Net foreign investment (our investment in foreign countries)

-1
Personal consumption expenditures

110
Personal contribution to social insurance (employee payroll taxes)

2
Personal income taxes

16
Rental income of persons

5
Undistributed corporate profits

5
  1. [20%] Explain why government receipts and expenditures create special problems for national income (or gross product) estimators. How are these problems resolved?
  2. [40%] For each of the following items explain the following:
    1. Its nature;
    2. Its treatment in the computation of GROSS NATIONAL PRODUCT and of DISPOSABLE PERSONAL (CONSUMER) INCOME by the U. S. Department of Commerce;
    3. Grounds for such treatment;
    4. Your evaluation of the grounds and your own recommendations. Justify each position you take.
      1. Capital gains and losses
      2. Imputed rent
      3. Interest on the Federal debt
      4. Payments made to veterans for education
      5. Food produced in the farm and consumed by the farmer and his family.
      6. Undistributed profits
      7. Intermediate products
      8. Profits made by a monopolist
      9. Profits made by an American corporation abroad but not remitted to the U. S.
      10. Employer contribution to social insurance.

* * * * * * * * * * * * *

E. D. Domar
December 7, 1955

THE JOHNS HOPKINS UNIVERSITY

NATIONAL INCOME AND EMPLOYMENT
(Political Economy 3)

[SECOND] HOUR EXAMINATION
Fall Term, 1955-56

Answer all questions in any order you like. Indicate each step in your reasoning. No credit will be given for vague generalities.

  1. [20%] Discuss the performance of the American economy during the period 1866-1918. Try to explain the causes of the most important developments.
  2. [5%] The numbers below refer to the United States in 1954. Indicate in your blue book the one number which in each case comes closest to being true. If you fail to indicate a number you will receive zero; if you indicate an incorrect one you will receive a negative score.
(a) Gross National Product (in current prices) 360 375 390 (billions)
(b) Gross Private Domestic Investment 30 45 60 (billions)
(c) Disposable personal income 250 275 300 (billions)
(d) Personal savings as a fraction of disposable personal income 3 5 7 (per cent)
(e) Compensation of employees as a fraction of National Income 50 70 90 (per cent)
  1. [20%] “Gross National Product is an excellent index of the welfare of the people.” Comment.
  2. [25%] State and explain the main factors affecting Personal Consumption Expenditures out of a given Gross National Product.
    Explain which of them and in what manner can be affected by government policies.
  3. [20%] Whether gross national product is approached from the production, income or expenditure point of view, the totals are supposed to be identical (subject to a small statistical error). Yet in current economic discussions one often hears expressions such as “shortage of purchasing power,” “excess of purchasing power,” “insufficient investment,” “excessive government expenditures,” and so on.
    How do you reconcile this contradiction?
  4. [10%] “What is good for an individual or a firm is good for the country.” Comment.

* * * * * * * * * * * * *

E. D. Domar
January 27, 1956

THE JOHNS HOPKINS UNIVERSITY

NATIONAL INCOME AND EMPLOYMENT
(Political Economy 3)

FINAL EXAMINATION — THREE HOURS
Fall Term
1955-56

Answer all questions in any order you like. Indicate carefully each step in your reasoning.

  1. [24%] Explain CAREFULLY how each of the transactions listed below affects (if it does)
    1. GROSS NATIONAL PRODUCT,
      and one or more of its subdivisions:
    2. PERSONAL CONSUMPTION EXPENDITURES,
    3. GROSS PRIVATE DOMESTIC INVESTMENT,
    4. NET FOREIGN INVESTMENT
    5. GOVERNMENT PURCHASES OF GOODS AND SERVICES.
      1. Interest on the Federal debt received by individuals from the government.
      2. An allowance received by a college student from his parents.
      3. A fee to a music teacher paid by the student mentioned in (b).
      4. Purchases of groceries made by the wife of the music teacher mentioned in (c).
      5. Land purchased by the City of Baltimore to build a music center.
      6. Exports of used buses to South America.
      7. Personal income tax paid by the individual to the Federal government.
      8. Capital gains made by a college professor on the stock market.
      9. Tourist expenditures made abroad by the professor mentioned in (h) out of his capital gains.
      10. A loan which a Baltimore business man obtained from the local bank.
      11. A Federal bond which a student cashed at the local bank.
      12. A house which Mr. X. has just constructed for himself and his family.

In each case, follow the criteria used by the U. S. Department of Commerce, but feel perfectly free and welcome to state and justify other criteria that you would prefer to use.

DO NOT GO BEYOND THE EVENTS DESCRIBED IN EACH TRANSACTION. DO NOT TAKE INTO ACCOUNT ANY SECONDARY EFFECTS.

  1. [20%] Discuss the performance of the American economy during the period 1919-39. Present an analysis of the most important developments. Be specific.
  2. [10%] (a) Explain thoroughly and (b) evaluate critically the concept of the MULTIPLIER by indicating how it is supposed to work, on what assumptions it is based, and its usefulness (if any) in the explanation of economic fluctuations and for the formulation of economic policy.
  3. [15%] In 1946, soon after the end of World War II, Congress was considering a large loan to Britain. A question naturally arose as to why the loan should be given to Britain rather than to some other country. A front page article in the New York Times defended the loan to Britain on the ground that the British would undoubtedly spend the proceeds of the loan in the United States, while some other country might not be so accommodating.
    Comment fully on the argument advanced by the New York Times.
  4. [16%] Define briefly the following terms and explain critically their use in economic analysis. Illustrate your explanation with examples
    1. Marginal efficiency of capital (or of investment).
    2. Index numbers.
    3. Acceleration principle.
    4. Saving and Investment account.
    5. Intermediate products.
    6. Kondratieff Cycle.
    7. Secular stagnation.
    8. Imputed rent.
  5. [15%] Some time ago John M. Keynes, the famous English economist, suggested that the Government should:

“Fill old bottles with (newly printed) banknotes, bury them at suitable depth in disused coal mines which are then filled up to the surface with town rubbish, and leave it to private enterprise to dig the notes up again…”

Retaining your sense of humor and remembering that Keynes was endowed with one too, discuss thoroughly the following questions regarding this statement:

    1. What economic conditions did Keynes try to remedy by this strange method?
    2. Suppose his suggestion were accepted. Trace as completely as you can its effects on national income (or gross national product), the level of employment and the price level.
    3. Compare the effects of Keynes’ suggestion with those resulting from a discovery and mining of gold deposits (a) in the U. S. (b) in a small country like Holland.

Source: Duke University. Economists’ Papers Archives, David M. Rubenstein Rare Book & Manuscript Library. Evsey D. Domar Papers, Box 16, Folder “Misc. Examinations”.

Image Source: 1956 Johns Hopkins University yearbook Hullabaloo (p. 15).

Categories
Exam Questions M.I.T. Macroeconomics Microeconomics

M.I.T. General Exams, Micro and Macro. Feb 1967

Here we have another example of the sharing that goes on among leading economics departments. For some reason Zvi Griliches at Harvard had a copy of the general examination questions for both microeconomics and macroeconomics at M.I.T.  that he kept in his files of Harvard prelim exams. Since anybody looking for M.I.T. economics exams would unlikely get all the way to Griliches’ papers (a goldmine for Chicago and Harvard exams by the way), Economics in the Rear-view Mirror has transcribed them for the digital historical record of the M.I.T. economics department.

____________________________

[Handwritten note:] MIT Prelim            Return to Z.G.

February 8, 1967

General Examination
Micro Theory — Two Hours

Answer any THREE questions (40 minutes each).

  1. In a two-factor, two-product economy with fixed stocks of L and T, both industries use L and T in the same proportion when facing the same pair of factor prices. One industry is purely competitive, with constant returns to scale; but the other is a “natural monopoly,” with moderately increasing returns to scale. Every household always divides its income equally between the two goods.
    1. What kind of transformation curve will the economy have?
    2. If the monopoly is regulated so that price equals average cost, what will this imply as to the economy’s general equilibrium? Comment on the relationships among the prices and quantities of the two goods, the real wages and rents in terms of both goods, and the labor and land quantities allocated to the two industries.
    3. Is there then any way in which the allocation of resources can then be improved? Explain.
  2. An individual has an income from property of Y0 per year. If he faces a given wage rate, at which he chooses to work t1 hours for total wages of Y1 what will be the comparative revenues of the following alternative taxes, when each would have the same effect on the individual’s own welfare:
    1. a lump-sum tax
    2. a proportional tax on his wage income
    3. a progressive tax on his wage income?
  3. A monopolist faces a linear demand for his product, which is produced with just L and T subject to fixed coefficients. What can you say about his demand for L
    1. in a short run when T is fixed in quantity, and
    2. in the long run when T is available at a fixed price? Explain fully.
  4. Discuss the welfare economics doctrines associated with at least three of the following economists:
    1. Bergson
    2. Arrow
    3. Pigou
    4. Hicks-Kaldor-Scitovsky
  5. Discuss the similarities and differences between the problems of duopoly and bilateral monopoly. You may limit your discussion to the simpler standard instances of each.

*  *  *  *  *  *  *  *  *  *  *  *  *

General Examination in Macroeconomics
February 3, 1967

Answer three questions.

  1. Suppose i) Net Saving is proportional to NNP; ii) Net Investment is an increasing function of NNP and a decreasing function of the interest rate, r, with the shape illustrated.

    1. What justification is there for an investment function of this general shape?
    2. Plot the implied IS curve.
    3. Plot a conventional LM curve and discuss the determination and stability of macroeconomic equilibrium and the consequences of an increase in the money supply.
  2. “The capitalist investor is fundamentally a friend of the worker, but the technical inventor can quite often be his enemy.” (Wicksell) Discuss.
  3. Why has the average propensity to save not fallen as income per head has increased in the U.S.?
  4. Suppose investment behavior is such that all investment opportunities which offer a rate of return equal to or greater than some fixed target rate R are instantly adopted. Labor and capital are the only factors of production; constant returns to scale and diminishing returns prevail. The labor force grows exogenously at a fixed annual rate g.
    1. What saving rate, relative to national product will just maintain full employment in the steady state?
    2. How does that saving rate vary with g?
    3. What do you make of the common notion that a rapidly-increasing labor force makes it harder to maintain full employment?
  5. Suppose that scientific inventory control methods reduce the desired inventory/sales ratio. Construct a simple model of inventory cycles which will tell you the effect of this development on the damping of inventory fluctuations.

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

Image Source: The MIT beaver from the cover of the 1949 yearbook Technique.

Categories
Business Exam Questions Harvard

Harvard. Exams for Elements of Accounting. W.M. Morse, 1908-1909

The department of economics did offer a couple of business related courses  to help prepare its undergraduate majors for careers in commerce, finance, and business generally. From the enrollment numbers we see that accounting was pretty popular. It had the third highest course enrollment (167), following Principles of Economics (503) and Economic and Financial History of the United States (198) in 1908-09.

With only a modest gumshoe effort I was able to track down the teaching assistants for the course. All three became lawyers, one even a judge.

Note: According to the printed course announcement for Elements of Accounting this should have been a half-course (one semester) but, as in previous years, this was in fact a full-course (two semesters).

________________________

The Teaching Assistants

Robert Mann Johnson (cum laude, Economics, A.B. 1908, LL.B. 1911)

Jacob Joseph Kaplan (magna cum laude, A.B. 1907, LL.B.1910),

Harold Birdsall Platt (magna cum laude, Economics, A.B. 1908, LL.B. 1911)

Source: Harvard University, Quinquennial catalogue of the officers and graduates 1636-1930, pp. 458 and 460.

New York Times Obituary for Robert Mann Johnson

   Robert Mann Johnson of 58 Lynwood Road, Scarsdale, N.Y., a lawyer with the firm of Milbank, Tweed, Hope & Hadley, died of a heart attack yesterday as he enetered his firm’s office building at 15 Broad Street. His age was 60.

Born in North Weymouth, Mass., he was graduated from Boston Latin School in 1905, Harvard College in 1908 and Harvard Law School in 1911. Mr. Johnson practiced in Massachusetts before coming to New York and being admitted to the New York bar in 1921. He was with the firm of Masten & Nichols from 1928 until 1931 when he became associated with the Milbank company.

Surviving are two daughters, Marjorie Elizabeth and Hollis Ann.

Source: The New York Times, July 30, 1948, p. 18.

From the Jacob J. Kaplan Papers Collection

Judge Jacob J. Kaplan, born March 12 1889 was a prominent and well-respected Judge in Boston, Massachusetts. Born in New York, his family moved to Boston and settled in the West End. With the support of his parents, Kaplan excelled academically and at fifteen entered Harvard University. While at Harvard, Kaplan continued to prove his academic prowess. He was elected into the Phi Beta Kappa honor society, graduated in three years, and attended Harvard Law School as one of the youngest members and graduates.

After graduating from law school, Kaplan spent seven years under the tutelage of Louis Brandeis, and gained skills that led to employment at the distinguished law firm of Nutter, McClennen and Fish. This notable position led to an appointment as the President of the Boston Bar Association and as a committee member on the Federal Judiciary of the American Bar Association. As a senior partner at Nutter, McClennen and Fish, Kaplan earned great respect from his colleagues and soon began his career as a judge with a seat as Justice of the Dorchester Municipal Court.

Among his many interests was the financial welfare of the city of Boston. This is reflected in his choice to serve on the boards of the Boston Finance Commission, the Federated Department Stores, Filenes’s, and the Provident Institution of Savings. Judge Kaplan also had a deep respect for the educational institutions of Boston and was a trustee of Wellesley College, Hebrew Teachers College of Boston, Boston Society of Natural History, and the Museum of Science. He was also a member of the Board of Governors of Boston University.

Judge Kaplan’s wide range of interests in the welfare of the Jewish people led to his service as a board member, director, and trustee of a variety of committees such as Beth Israel Hospital, World Peace Foundation and International Friendship League, War Emergency Council, Jewish Welfare Board, and Administrative Committee of United Palestine Appeal. He was the founder of the Boston Chapter of the American Jewish Committee.

Judge Jacob J. Kaplan died in 1960.

Source: Biographical Note to the Jacob J. Kaplan Papers. The Wyner Family Jewish Heritage Center at New England Historic Genealogical Society.

Harold B. Platt Dies After Short Illness
New York Investment Broker Was Church Treasurer.

   Harold Birdsall Platt of 11 Duryea Road, Upper Montclair, New York investment broker, died yesterday in Mountainside Hospital after a short illness. Funeral services will be held tomorrow afternoon at 2 o’clock at the Home for Services, 56 Park Street. The Rev. Dr. George C. Vincent, minister of the Union Congregational Church, will officiate. Interment will be in Greenwood Cemetery, Brooklyn, N. Y.

Born in Brooklyn, Mr. Platt was graduated from Harvard in 1908 and Harvard Law School in 1911. After working in the office of the New York City District Attorney for several years, he left the law business to join the James M. Toolan Company, New York City securities specialists, with which firm he had been a partner for the past twenty years.

Mr. Platt was treasurer of Union Congregational Church, treasurer of the Middle Atlantic Conference of  Congregational Christian Churches, a director of the Margaret and Sarah Switzer Convalescent Home for Girls in Manasquan and a member of the National Republican Club, New Jersey Harvard Club and Harvard Engineering Club.

Surviving Mr. Platt are his wife, Mrs. Gertrude Middleditch Platt; a daughter, Mrs. Henry Guyon Kiggins Jr. of North Plainfield, and a son, Willard E. Platt of Red Bank.

Source: The Montclair Times (New Jersey), March 1, 1951, p. 4.

________________________

Earlier Accounting Exams at Harvard

1901-02
1902-03
1903-04
1904-05
1905-06
1906-07
1907-08

________________________

William M. Cole
His Textbook

Accounts. Their Construction and Interpretation for Business Men and Students of Affairs. Boston: Houghton Mifflin Company, 1908.

“The first issue of this book was brought out at a time when no general, non-technical, non-professional treatise on accounting had been published . The author had then been giving for eight years a course of instruction to seniors in Harvard College on the principles of accounting, and believed that many business men and students of affairs would be interested to see briefly but comprehensively how accounts are constructed and interpreted.”
Revised and enlarged edition, 1915.

________________________

Course Enrollment
1908-09

Economics 18. Asst. Professor W. M. Cole, assisted by Messrs. Johnson, Kaplan, and Platt. — Elements of Accounting.

Total 167: 3 Graduates, 84 Seniors, 40 Juniors, 7 Sophomores, 33 Others.

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

________________________

Course Announcement with Description
1908-09

COURSES ESPECIALLY PREPARING
FOR A BUSINESS CAREER

Among the courses […], those on the industrial and financial phenomena of modern times are useful for students who propose to enter on a business career. Such are the courses on Money and Banking (8a and 8b), Commercial Crises and Cycles of Trade (12). Economics of Transportation (5), Problems of Labor (9a). the Economics of Corporations (9b), the Economic and Financial History of the United States (6b), and European Industry and Commerce in the Nineteenth Century (6a). In addition, the following courses are designed more particularly to aid in the understanding of the problems likely to be met in business life, and are arranged with special regard to the needs of those looking to such a career. They are primarily for students who have reached or approached the close of their general education.

*18 1hf. Elements of Accounting. Half-course (first half-year).
Mon., Wed., and (at the pleasure of the instructor) Fri., at 3.30. Asst. Professor COLE.

This course is designed to show the processes by which the earnings and values of business properties are computed.
It is not intended primarily to afford practice in book-keeping; but since intelligent construction and interpretation of accounts is impossible without a knowledge of certain main types of book-keeping, practice sufficient to give the student familiarity with elementary technique will form an important part of the work of the course. The chief work, however, will be a study of the principles that underlie the determination of profit, cost, and valuation. These will be considered as they appear in several types of business enterprise. Published accounts of corporations will be examined, and practice in interpretation will be afforded. The instruction will be chiefly by assigned readings, discussions, and written work.
This course is regularly open only to Seniors and to Graduates who have had Economics 1. Students intending to enter the Graduate School of Business Administration are expected to take this course in preparation for the advanced courses in accounting.

[The other course was Economics 21 1hf, Principles of Law governing Industrial Relations taught by Professor Wyman.]

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, pp. 56-57.

________________________

ECONOMICS 18
Mid-year Examination, 1908-09

Arrange your answers in the order of the questions. Answer the exact questions asked and do the exact problems set, and no others.

  1. What is the complete function of a ledger as distinguished from that of a modern journal?
  2. Supposing a journal, a cash book, and a sales book to be kept, show (a) normal entries without duplication, and (b) ledger postings, for the transaction below.
    A partnership is dissolved, and in settlement the retiring partner is given the following:—

Cash, $20,153,
Bills receivable (notes of customers, average due in one month, with discount allowed of $25.00), $5000,
Bills payable (of the new firm, due in one month), $5000,
Merchandise (the complete line of dry goods in stock), $7550.

Indicate, by posting checks, from what source each portion would get into the ledger.

  1. The items below appear on a six-column statement.
    1. Show the closing of the ledger for the accounts named.

(Italics for red ink.)

Resources Liabilities Losses Gains
Proprietor 25,000 25,000
Real Estate 15,000 14,775 225
Merchandise 55,000 65,000 18,000 28,000
Rent 1,200 150 1,350 50
Loss and Gain 140 140
    1. Is this partial statement correct? Defend your answer.
  1. The following sorts of expenditures have been incurred.
    1. In entering, how far does good accounting allow their consolidation, i.e., what is the minimum number of accounts that may contain them? Explain the purpose of each account so to be maintained, and state why it must be maintained.
    2. What is the maximum feasible differentiation, i.e., the greatest number of accounts likely to be useful for these items? Name and defend each, and indicate which items should go to each,

Feed of delivery horse.
City directory.
New delivery harness.
Repairing wagon.
Wages of teamster.
Shoeing horse.
Subscription to “Trucking Journal.”
Delivery baskets.
Feed bag.
Bonus paid in trading an old horse for a younger one.

  1. In closing books at the end of a year
    1. what allowance, if any, should be made for interest on the notes below?
    2. Show for each note the resulting effect on the balance sheet. Assume all notes to have two months yet to run, and interest to be at 6%.
Bills receivable No. 120, bearing interest $1,000
Bills receivable No. 127, without interest 2,000
Bills payable No. 74, without interest 3,000
Bills payable No. 84, bearing interest 4,000
  1. On Dec. 28, 1908, you buy a patent right under which you can manufacture and sell annually for five years in one State 1000 desk attachments at a profit of one dollar each over the profit on the only unpatented marketable article.
    1. From the table below, determine as accurately as you can the theoretical value of that patent right when money is worth 5%.
Table of 5% ratios
0.746215 0.907029 1.102500
0.783526 0.952381 1.157630
0.822702 1.000000 1.215506
0.863838 1.050000 1.276282
1.340096
    1. Is your figure absolutely accurate for the theoretical value, or is it based on a calculable error? If the latter, how should you calculate the error?
    2. At the close of the year, shall the patent right appear on the balance sheet? If so, where and for what approximate amount?
    3.  Shall that patent right appear on a detailed balance sheet for Dec. 31, 1909, on a detailed income sheet for 1909, on both, or on neither? Defend your answer.
  1. The balance sheet of a corporation on Jan. 1, 1908, was as follows:
Merchandise $65,000 Capital stock $75,000
Bills receivable 15,000 Bills payable 10,000
Accounts receivable 8,000 Accounts payable 5,000
Fixtures 3,000 Surplus 5,000
Cash 4,000
[Total] 95,000 95,000

During the year 1908, the net income was $10,000; purchases, $200,000; sales, at 20% above cost price, $240,000; cash decrease, $3,000; bills receivable accepted, $5000 in excess of such notes collected; accounts receivable charged, $1000 in excess of accounts receivable collected; bills payable extinguished, $1000 in excess of those issued; accounts payable incurred, $2000 in excess of those paid; dividends paid, $8000.

Show the balance sheet for the new year.

  1. Was the business of 1908 outlined in Question 7 favorable or unfavorable? Explain in detail.

Source: Harvard University Archives. Harvard University. Mid-year Examinations, 1852-1943. Box 8, Bound Volume: Examination Papers, Mid-Years 1908-09.

________________________

ECONOMICS 18
Year-end Examination, 1908-09

Arrange answers as far as possible in tabular form.

I.
Take all.

  1. What is the purpose of the following accounts:—
Bills Receivable. Interest Due.
Capital Stock. Interest Accrued.
Insurance. Interest Earned.
Power. Discount on Bonds.
Accounts Receivable. Neglected Discounts.
  1. For additions chargeable to capital, $2,000,000 is spent out of current receipts. Two months later, notes are issued at par to recoup the treasury ready for the semi-annual payment of dividends. The dividends are paid. Six months later, capital stock is issued for the notes, exchanged on the basis of $90 in stock for $100 in notes.
    Disregard interest, and show journal entries to represent the transactions.
  2. The figures below are what a bookkeeper finds on his books at the close of the year.
Capital stock $169,000
Real estate $70,000
Mortgages payable 55,000
Bills payable 25,000
Bills receivable 15,000
Accounts receivable 17,000
Merchandise 150,000
Cash 7,000
Expenses 15,000
Interest 3,000
Taxes 2,500
Sales 30,500
$279,500 $279,500

He reports to the directors a balance sheet as follows:—

Real Estate $63,000 Capital Stock $169,000
Bills receivable 15,000 Mortgages payable 55,000
Accounts receivable 17,000 Bills payable 25,000
Merchandise 130,000 Reserve for bad debts 4,250
Cash 7,000
Profit and loss 21,250

$253,250

$253,250

Explain all apparent discrepancies between the two sets of figures.

  1. What is the significance of a debit balance, in intervals between periodical closings of the books, for the following accounts:
Expense Accumulation for Bond Discounts
Cash Patent Rights
Stores Sinking Fund
  1. You join a summer colony within easy rail communication of the city. A general organization of members of the colony controls a central club-house with grounds. The restaurant privilege is sold to outsiders. Facilities are offered to members for tennis, golf, billiards, bowling, boating, swimming. For all these privileges, fees are charged and expenses are incurred. All excess income is to be carried to a general-purpose fund. Entertainments are provided at club expense. You are chosen president of the club.
    Outline a general plan for applying the principles of accounting to assist in making the club successful. What ledger accounts should be kept, what items should be carried to each, and what statistics should be gathered?

II.
Take two.

  1. The balances of a single proprietor’s set of books kept by single entry are as follows:—
Accounts receivable $15,000
Accounts payable 20,000
Cash 7,000
Bills payable 14,000

He finds the following property:—

Merchandise $56,000
Furniture, etc. 1,500
Bills receivable 4,000

Show a balance sheet for the business when the books are converted into double entry.

  1. What is the operation of a bond sales account?
  2. A is expected to live 10 years; B, 15 years; C, 20 years. A has a life interest in property yielding $5,000 annually; B, a life interest in property yielding $3,000 annually; C is the remainder man for both properties. How could you determine the value of C’s life interest in both properties?
  3. You pay $500 for a lease entitling you to use a certain building at a rental of $1,000 a year for ten years. At the end of five years you dispose of the lease for the remaining five years. How can you tell whether you have made a profit on the sale of the lease?

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. 47-49.

Categories
Chicago Exam Questions Microeconomics

Chicago. Price Theory Core Examination. Winter 1965

Another specimen of the Chicago price theory exam featuring True/False/Uncertain questions. This copy found in the Zvi Griliches’ papers in the Harvard Archives.

____________________

Chicago Price Theory
Preliminary/Core Exams
Previously Posted

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

____________________

CORE EXAMINATION
Price Theory
Winter, 1965

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. 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. A monopolist can always get more revenue from a consumer by a fixed sum plus price-per-unit system of charging than by the price-per-unit alone.
    2. A flat sum tax on the firms in an industry will never have an effect upon output in the short-run.
    3. If a demand curve is defined as the relationship between price and quantity of X, the real income and the prices and quantities of other goods held constant, it will have an elasticity of -1.
    4. If a cartel assigns quotas to its member firms on the basis of their “capacity” there will be more than the profit-maximizing amount of investment in the industry.
    5. If all commodities had positive income elasticities, there would be no merit in the present distinction between substitution and income effects.
    6. The elasticity of demand for X with respect to the price of Y never equals the elasticity of demand of Y with respect to the price of X.
    7. The short-run price elasticity of the supply of beef can be negative.
    8. The assumptions of competition, constant returns to scale, and equilibrium are inconsistent.
    9. A competitive firm will increase its output as a result of a fall in the price of one of its inputs.
    10. The own-price elasticity of demand for a commodity is no smaller, in absolute value, than the marginal propensity to consume that commodity.
    11. “The price paid for water is no indication of its true value in use because the water makes the production of additional wealth possible. Thus a farmer may pay his irrigation district $8.00 for water per acre of land, but the value of the crops grown might be in the neighborhood of $100 per acre.”
    12. “A central planning authority may or may not decide to weight equally the welfare of the future generation and the welfare of the present generation. This is essentially an ethical question. But if equal weights are to be applied, the appropriate rate of discount (interest) to use in comparing the costs and benefits from alternative public investments is a zero rate.”
    13. In equilibrium, a competitive firm has all the business (sales) it wants. Hence advertising is incompatible with either competition or equilibrium.
    14. The fact that a consumer, in equilibrium, is not consuming all of the possible commodities, implies that he gets increasing marginal utilities from the commodities that he does consume.
    15. A tax on American citizens who go abroad will reduce tourist expenditures and hence improve the U.S. balance of payments only if the demand for foreign trips is elastic.
  1. “Exploration for natural gas or oil is a form of investment. As such, like all investments, it depends on the expected level of future output (demand). Thus, a rise in the governmentally fixed (regulated) price of natural gas will decrease consumption and hence curb exploration. Conversely, lowering the price of gas will stimulate both consumption and exploration.” Appraise.
  2. Assume the following simple world, in which you are asked to determine the optimum rate of automobile accidents.
    1. The only type of accident which occurs is that a car may run into a house. The damage is then always $200.
    2. The probability of an accident will be greater,
      1. …the faster automobiles are driven
      2. …the closer houses are set to the highway.

Assume explicitly any additional information you need to define the socially optimum accident rate. What mechanism, if any, could you design to achieve it?

  1. The competitive private enterprise form of economic organization is regarded by some economists as a sort of ideal which it would be desirable to approximate in practice.
    1. On a purely theoretical level, use the tools of economic analysis to explain to a skeptic precisely in what way(s) and why the competitive private enterprise form is optimal.
State whatever assumptions and define whatever terms you require, and state explicitly the criteria of excellence that you are using.
    2. Are there any conditions under which the competitive organization form may fail to produce the results promised above?
    3. What other important economic problems of a modern state, if any, may still be unsolved despite the fact that perfect competition has been achieved? Explain in each case why the problem is important and why perfect competition does not solve it, or explain why there are no unsolved problems.

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