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Chicago Exam Questions Suggested Reading Undergraduate

Chicago. Undergraduate Money and Banking. Exams, readings. Friedman, 1946-49

 

Besides teaching in the core graduate price theory course at Chicago, Milton Friedman also covered undergraduate money and banking upon joining the faculty of the economics department. Below some material transcribed from a folder of course material found in Milton Friedman’s papers at the Hoover Institution Archives. Where answers were provided to some examination questions, they have been transcribed [and placed in square brackets] and included below.

Fun Fact: According to class rolls kept by Friedman, Marc Nerlove was a student in the Autumn 1951 Money and Banking class taught by Friedman.

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Course Announcement and Description

[Economics] 230. Introduction to Money and Banking. Study of factors which determine the value of money in the short and in the long run; and operation of the commercial banking system and its relation to the price level and general business activity. Prereq: Soc Sci 2 and Econ 210, or equiv. Aut: MWF 10:30 Friedman; Win: MWF 2:30; Mints.

Source:   University of Chicago. Announcements. The College and the Divisions, Sessions of 1947-1948. Vol. XLVII, No. 4 (May 15, 1947), p. 224.

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Text for Economics 230:

L. V. Chandler, The Economics of Money and Banking. Harper & Brothers.

The Book will be used again as a text when the course is given in the Winter Quarter. Give the number in class as that of the Autumn, 1947.
Reserve List & Bookstore.

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Economics 230
Autumn 1947
Library Book List

Robertson, D. H. Money

Gregory, T. E. The Gold Standard and Its Future (3rd)

Board of Governors. Federal Reserve System.Its Purposes and Function

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Economics 230
Autumn 1951

Supplementary Readings and Problem for Reading Period

Readings

Text: Lester Chandler, Economics of Money and -Banking

  1. American Economic Association, Readings in Monetary Theory, edited by Friedrich Lutz and Lloyd W. Mints.
  2. Goldenweiser, E.A., American Monetary Policy.
  3. Gregory, T.E., The Gold Standard and Its Future.
  4. Hardy, C.O., Credit Policies of the Federal Reserve System.
  5. Keynes, J.M., Essays in Persuasion.
  6. Mints, Lloyd W., Monetary Policy for a Competitive Society.
  7. Robertson, D.H., Money.
  8. S. Board of Governors of the Federal Reserve System, The Federal Reserve System, Its Purposes and Functions.

 

Problem

            For a convenient date in 1951, estimate the maximum amount of currency and deposits that would have been outstanding if the banking system had used all the possibilities of monetary expansion available under the then existing laws and regulations about reserve requirements of member and non-member banks and about reserve requirements of Federal Reserve Banks. For purposes of the computation, assume (a) an unchanged amount of Treasury currency outstanding; (b) elimination of Treasury deposits with Federal Reserve Banks through purchase of government securities held by the Federal Reserve Banks. With respect to all other factors—such as percentage distribution of public’s money holdings among currency, demand deposits, and time deposits—you are to choose your own assumptions, the choice of reasonable assumptions and the presentation of evidence for them being an essential part of the problem.

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MIDQUARTER EXAMINATION IN ECONOMICS 230
[no date, though likely 1947]

  1. Indicate the factors that principally determine—
    1. (15 points) The ratio of the amount of currency in circulation to the amount of bank deposits.
    2. (15 points) The ratio of the amount of bank deposits to the amount of reserves held by the banking system when there are no legal reserve requirements.
  2. (35 points) In country A, important new discoveries of oil are made, driving down the price of oil in that country relative to the world price. Assume that this is the only important change relevant to international trade. Trace the effects of this change on exchange rates, gold flows, price levels, imports and exports, and incomes, in country A and in the rest of the world on the assumption (a) that a strict gold standard is in operation; (b) that inconvertible paper standards and fluctuating exchanges are in operation.
  3. (35 points) Explain in detail the effects on Bank A and on the banking system as a whole arising from the deposit in bank A of $100 of newly-printed currency. The deposit is made by a worker who has just received the currency from the government. Assume the bank is fully exploiting its lending power.

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Economics 230
Midquarter Examination
November 5, 1948

  1. (25 points) It has been argued that it would be profitable for a member bank to borrow from its Federal Reserve bank even at a rate of interest considerably higher than the rate the member bank charges to its customers; and that this is so because one dollar of additional reserves can support several dollars of additional deposits. For example, if $1 of additional reserves can support $5 of additional deposits, it is argued that it would be profitable (if we neglect the cost of making the loan) for a member bank that can lend at 6% to borrow at any rate up to 30%. Evaluate this argument.
  2. (25 points)
    1. Nondeposit currency currently in circulation in the United States include Federal Reserve notes, silver certificates, United States notes (greenbacks) and National Bank Notes. In addition, there is a large volume of gold certificates outstanding but not in circulation. Indicate brieflythe historical origin of each of these types of currency, and the major episode in our monetary development each one symbolizes.
    2. What is the FDIC? What, in your view, is its essential function (which may not be the same as its announced purpose) in our current monetary structure?
  3. (50 points) Indicate whether the operation described in the first column would, in the first instance, increase (+), leave unchanged (0), or reduce (-) the item listed at the top of each column. For simplicity, assume (a) that nonmember banks are notinvolved in any of the transactions, (b) that the Treasury deposits all funds received in a Reserve Bank and pays for all expenditures by checks on a Reserve Bank, (c) that all nondeposit currency is in the form of Federal Reserve Notes. Take account only of the essentially bookkeeping effects of the operation, not of subsequent effects. For example, in operation (1) the decline in currency outside banks and the Treasury might so disturb the public’s relative holdings of deposit and nondeposit currency as to lead subsequently to a conversion of deposits into nondeposit currency. Do nottake such subsequent effects into account.
    [+1 for each correct, -1 for each wrong, 0 for no entry]

 

Operation Currency outside banks and Treasury Member bank Federal Reserve Bans
Demand Deposits Excess Reserves Deposits Excess Gold Reserves
Purchase of government bond by public
From Federal Reserve Bank
(1) with non deposit currency [-] [0] [0] [0] [+]
(2) by check [0] [-] [-] [-] [+]
From Treasury
(3) with non deposit currency [-] [0] [0] [+] [0]
(4) by check [0] [-] [-] [0] [0]
From public
(5) with non deposit currency [0] [0] [0] [0] [0]
(6) by check [0] [0] [0] [0] [0]
Purchase of government bond by Treasury from
(7) public a [0]
b [+]		 [+]
[0]		 [+]
[0]		 [0]
[-]		 [0]
[0]
(8) member bank [0] [0] [+] [0] [0]
(9) Federal Reserve bank [0] [0] [0] [-] [+]
Conversion of demand deposit by public into
(10) non deposit currency [+] [-] [+] and [0]
[-] and [-]
[only if both]		 [0]
(11) time deposit [0] [-] [0] [0] [0]

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Final Examination for Economics 230
Autumn, 1946
3 hours and overnight.

Part I

  1. Define briefly the following terms:
    1. Required reserves
    2. Open market policy
    3. Gold points
    4. Rediscount rate
    5. Inconvertible paper currency
    6. Transactions velocity of circulation
    7. The equation of exchange
  2. What techniques are available to the Federal Reserve System for controlling the total volume of currency? How does each technique work? Under what conditions is each technique likely to be effective?
  3. It is often asserted that in returning to gold at the pre-first-world-war parity Britain “overvalued” the pound. What does this statement mean? What kind of evidence would be required to test its validity and how should this evidence be interpreted? If the statement is true, what effects would overvaluation of the pound be expected to have on Great Britain? What factors would operate to remove these effects and to correct the overvaluation? What kinds of governmental policy, if any, would speed up the process of correcting the overvaluation?

Part II

  1. (20 points) What is the 100% reserve proposal? Discuss its advantages and disadvantages as compared with the present system.
  2. (30 points) A newspaper story of January 21, 1946, on President Truman’s budget message, had the following headlines and first two paragraphs:

“TRUMAN MAPS FIRST DEBT CUT SINCE 1930
CASH ON HAND TO OFFSET ’47 DEFICIT

“Washington—President Truman’s first budget proposes to spend $4,300,000,000 more than the government will collect, but for the first time since 1930, it won’t increase the national debt.
“Mr. Truman proposes to withdraw from the Treasury cash balance sufficient funds not only to offset this deficit but also to reduce the debt by $7,000,000.”

In answering this question assume that Government cash balances are held on deposit in member banks, and that no reserves are required for government balances.

(a) What is the monetary effect of financing the deficit by use of cash balances? Would this effect be deflationary or inflationary compared with such alternatives as raising additional revenue from taxes, or borrowing additional sums from (1) the nonbanking public, (2) member banks, (3) reserve banks.

(b) What is the monetary effect of using cash balances to reduce the debt? Discuss the effects if the bonds are purchased from 81) the nonbanking public, (2) member banks, (3) reserve banks.

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FINAL EXAMINATION, ECONOMICS 230, FALL, 1947

Part I

  1. In speaking of monetary developments in the United States at the beginning of the nineteenth century, H. L. Reed remarks, “the country was so inadequately provided with specie that the advantages of a money economy were not sufficiently extended and diffused.” What do you think this statement means? Does it make sense as it stands? If not, can you suggest an interpretation of it that makes sense?
  2. Explain in detail how, in a fractional reserve system, a given deficit in reserves may force a much larger contraction in currency. In your statement, indicate the factors that set a limit to the contraction and contrast the single bank with the banking system.
  3. To what causes does Gregory attribute the breakdown of the Gold Standard in Great Britain in 1931?

 

Part II

  1.    a. Assume that there is a free market in which English pounds exchange for American dollars. Indicate whether each of the following would, by itself, tend to raise or lower the price of a pound in terms of dollars.

1) An increase in tourist travel by Americans in England. [A. Raise]
2) A rise in dividend payments on American common stocks owned by British. [A. Raise]
3) A sudden craze in Britain for American films leading to increased showings of American films. [A. Lower]
4) Increased repayment by Britain of loans from the U.S. [A. Lower]
5) The raising of abnormally large amounts of relief funds in the United States to finance the shipment of special food packages to Great Britain. [A. Raise]

b. If England and the United States were both on a gold standard what words would it be reasonable to substitute for “raise the price of a pound in terms of dollars”? [A. “ship gold to Britain”] for “lower the price of a pound in terms of dollars”? [A.“ship gold to U.S.”]

c. You are asked what the total amount of money in the United States is. Discuss the problems of definition that would arise, indicating the considerations that would be relevant in deciding what to count as money.

d. Marriner Eccles, chairman of the Federal Reserve Board, recently proposed to Congress that member banks be required to set up a special reserve of 25 per cent of deposit liabilities in addition to existing reserves. Three members of the Federal Advisory Council—a council composed of private bankers who advise the Federal Reserve Board—testified against the proposal. The N. Y. Times reports them as maintaining that “it would reduce loans needed to finance production, and thus prove inflationary.” Discuss this statement.

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Economics 230
Final Examination
December 16, 1949

  1. (100 points) Indicate whether each of the following statements is true (T), false (F), or uncertain (U) and state briefly the reason for your answer.
    1. Legal reserves held by a bank are a liability of the bank.
    2. Banks that are members of the Federal Reserve System may not count cash in their vault as part of their legal reserves.
    3. Every bank that is a member of the Federal Reserve System must carry Federal Deposit Insurance.
    4. Every bank that carries Federal Deposit Insurance must be a member of the Federal Reserve System.

5 and 6. Bank A sells a government bond to Bank B, both banks being members of the Federal Reserve Stem. This…

    1. …increases total member bank reserves.
    2. …does not change total deposit liabilities of member banks.

7, 8, 9. Bank A, which is a member of the Federal Reserve System sells a government bond to Mr. Jones. Bank A deposits the proceeds in its account with a Federal Reserve Bank. This…

    1. …increases total member bank reserves.
    2. …does not change total deposit liabilities of member banks.
    3. …increases the ratio of reserves to deposit liabilities.
      *  *  *  *  *
    4. Since banks can expand loans by several times the amount of excess reserves, a bank that could make additional sound loans at 5 per cent, could afford to pay much more than 5 per cent to induce individuals to deposit currency in the bank, since such a deposit would increase the bank’s excess reserves.
    5. The economic function of legal reserve requirements is to protect depositors in a bank against undue extensions of loans by banks.
    6. An expansion of investments and an expansion of loans by commercial banks have identical effects on the quantity of money.

13 through 16. Mr. Jones pays his Federal income tax with a check on a member bank. The Federal government uses this check to buy a government bond from a Federal Reserve Bank. This operation…

    1. …reduces total member bank deposit liabilities.
    2. …reduces total member bank reserves.
    3. …increases the ratio of member bank reserves to member bank deposit liabilities.
    4. …increases the excess gold reserves of the Federal Reserve System.
      *  *  *  *  *
    5. The post-war rise in prices in the United States was one of the factors making necessary the recent devaluation of the British pound.
    6. Any phenomena that would lead to an outflow of gold from the United States under a gold standard would lead to a fall in the price of the dollar in terms of foreign currencies under a system of inconvertible currencies and flexible exchange rates.

19, 20, 21. Suppose that under an international gold standard, foreign payments and receipts by the United States balance so that there is no net outflow or inflow of gold.

    1. A sudden increase of gifts by residents of the United States to non-residents would tend to lead to an outflow of gold from the United States.
    2. A reduction in the tariffs imposed by France on goods imported into France would tend to lead to an outflow of gold from the United States.
    3. A large technological advance in Great Britain lowering the price of automobiles produced in Great Britain would lead to an outflow of gold from the United States.
      *  *  *  *  *
    4. Under a gold standard, a decline in the rate of interest will tend to narrow the spread between the gold points.
    5. Under existing laws governing bank reserve requirements, a tendency for people to move from farms and small communities to large cities is, by itself, a factor tending to reduce the total quantity of money.
    6. A lengthening in the average pay-period (through, say, an increase in the proportion of workers paid monthly instead of weekly) is, by itself a factor tending to reduce the price level.
    7. K, in the cash balance equation, will be increased by anything that leads people to expect price to fall.
    8. The numerical value of V in the transactions type of equation of exchange depends on the definition of M.
    9. The equation of exchange demonstrates that an increase in the quantity of money must lead to an increase in prices.
    10. Since one man’s receipts are another man’s expenditures, it follows that the quantity of money can be changed only by capital transactions.
    11. The rediscount rate is used by the Federal Reserve system to discourage purchase of government securities.
    12. Monetary policy can be more effective in preventing inflation than in preventing deflation.

 

  1. (50 points) “In the early history of our country there was a dearth of currency and specie. It was difficult to have cash on hand, especially when most of the specie was used to pay for imports.” (E. R. Taus, Central Banking Functions of the United States Treasury, 1789-1941, p. 22).

Discuss the economic meaning of these sentences. Do they make sense as they stand? If so, explain. If not, can you suggest any interpretation of them that does make sense? In your answer, emphasize analysis, not economic history.

  1. (50 points)

“One method proposed for bringing the reserve position under control while protecting the market for government securities held by banks is to require banks to keep a reserve of government securities against deposits, in addition to present cash reserves…..In all essential respects, raising required reserve ratios by adding a security-reserve requirement is identical with a straight increase of cash reserve requirements, combined with an equivalent purchase of government securities by the Reserve Banks. The only significant difference is that the security-reserve proposal provides the member banks with the equivalent of a subsidy (in the form of interest on the bonds) to compensate for the loss of earnings on additional assets tied up as reserves.”
Do you agree? Justify your answer.

  1. (50 points) Under our present monetary system, a desire on the part of the pubic to hold an increased fraction of its money in the form of currency and a decreased fraction in the form of deposits is said to be a factor making for a decrease in the total amount of money (currency plus deposits) in existence. Explain this statement in detail. In your explanation, distinguish between the effect of an outflow of cash on the individual bank and on the system.
  1. (50 points) Currency in public circulation (“cash in pocket”) was approximately one-sixth of the total amount of money (currency plus demand deposits plus time deposits) in the United States in 1892, it fell fairly steadily to about one-twelfth in 1930, and then rose more or less steadily until it is again approximately one-sixth, or about the same level as in 1892. The initial decline was interrupted by a rise during the first World War; and the subsequent rise was accelerated during the second World War.
    How would you explain the long decline to 1930? The subsequent rise? This tendency for the ratio to rise during war time? (Note that there is no unambiguously “right” answer to this question. So far as I know, those movements have not been exhaustively studied, and hypotheses to explain them have not been tested. You are being asked to construct hypotheses about them).

 

Source:  Hoover Institution Archives. Papers of Milton Friedman, Box 76, Folder 8 “University of Chicago, Econ. 230”.

Image Source:  Cropped from a photograph of Milton Friedman, George Stigler, and Aaron Director at the founding meeting of the Mont Pelerin Society, 1947, Milton Friedman papers, Hoover Institution Archives,

 

 

Categories
Agricultural Economics Exam Questions Harvard Suggested Reading Syllabus

Harvard. Marketing of agricultural commodities. John D. Black, 1947-48.

 

 

John D. Black took over the agricultural economics courses at Harvard that were previously the responsibility of Thomas Nixon Carver. The course of this post was co-taught by Professor Black and Dr. Charles D. Hyson and was simultaneously taught to both Harvard undergraduates and graduate students. Following the course syllabus for 1947-48 are the midyear exams for both the undergraduate and graduate courses and the final year-end exam for the undergraduates. I have been unable to find the graduate examination questions for the year-end final (they were not included in the collection of examinations archived at Harvard).

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Course Enrollment

[Economics] 7a. Professor Black and Dr. Hyson.—Consumption, Distribution and Prices (F)

Total 86: 43 Seniors, 30 Juniors, 11 Sophomores, 1 Freshman, 1 Radcliffe.

 

[Economics] 7b. Professor Black and Dr. Hyson.—Consumption, Distribution and Prices (Sp).

Total 44: 25 Seniors, 15 Juniors, 4 Sophomores.

 

[Economics] 107a. Professor Black and Dr. Hyson.—Consumption, Distribution and Prices (F)

Total 13: 5 Graduates, 5 Public Administration, 3 Radcliffe.

 

[Economics] 107b. Professor Black and Dr. Hyson.—Consumption, Distribution and Prices (Sp).

Total 8: 1 Graduate, 4 Public Administration, 3 Radcliffe.

 

Source.  Harvard University. Report of the President of Harvard College 1947-1948, pp. 89.

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SYLLABUS FOR ECONOMICS 7 AND 107
1947-1948

The required readings for Economics 7 and Economics 107 will be chosen from the references given below. The symbols used for frequently cited references are as follows:

**S.D.—Stewart and Dwehurst, DOES DISTRIBUTION COST TOO MUCH?, Twentieth Century Fund, 1942.

**Shep.—Shepherd, G.S., AGRICULTURAL PRICE ANALYSIS, Iowa State College Press, 1947 (revised edition).

**Waite—Waite and Cassady, THE CONSUMER AND THE ECONOMIC ORDER, McGraw-Hill Co., 1939.

*Cassels—Cassels, J.M., A STUDY OF FLUID MILK PRICES, Harvard University Press, 1937.

**T.N.E.C.—PRICE BEHAVIOR AND BUSINESS POLICY, Temporary National Economic Committee, Monograph No. 1, Government Printing Office, Washington, D.C., 1941.

**Nourse—Nourse, E.G., PRICE MAKING IN A DEMOCRACY, Brookings Institution, 1944.

**Dew.—Dewhurst and Associates, AMERICA’S NEEDS AND RESOURCES, Twentieth Century Fund, New York, 1947.

**Stig.—Stigler, G.J., THE THEORY OF PRICE, Macmillan Company, 1946.

**M.B.—Maynard and Beckman, PRINCIPLES OF MARKETING, Ronald Press, 1947.

*Nicholls—Nicholls, W.H., IMPERFECT COMPETITION WITHIN AGRICULTURAL INDUSTRIES, Iowa State College Press, (reprinted 1947).

**Com.—Department of Commerce, MARKET ANALYSES FOR BUSINESS, May, 1947.

 

PART I—INTRODUCTION

Ch. 1. Definition of the Field

M.B., Ch. 1.
Black, J.D. and Galbraith, J.K., “The Quantitative Position of Marketing in the United States”, Quarterly Journal of Economics, May, 1935.
S.D., pp. 3-14; 115-123.

Ch. 2. The Importance of the Field

Cassels, J.M., “The Significance of Early Economic Thought on Marketing,” Journal of Marketing, October 1936, Vol. 1, No. 2, pp. 129-133.
S.D., pp. 15-22; 123-126.

Ch. 3. The Evolution of Markets and Marketing

Marshall, A., PRINCIPLES OF ECONOMICS, 8th ed., Bk. V, Ch. 1.
M.B., Ch. 2.

PART II—CONSUMPTION ASPECTS

Ch. 4. The Field of Consumption Economics Considered in Relation to Marketing.

M.B., Chs. 3, 4, and 5.

Ch. 5. The Nature and Classification of Human Wants and Goods or Utilities

Dew., Chs. 5, 6, 7.
Waite, Chs. 1 and 14.
Scope and Method Bulletin No. 11, Research in Farm Family Living. Social Science Research Council, (1933), pp. 3-8; 45-58.

Ch. 6. The Dimensions of Utility and Its Measurement

Stig., Ch. 5.
Dew., Ch. 4.
The Review of Economic Statistics, November 1946, Five Views of the Consumption Function”.
Inadequate Diets and Nutritional Deficiencies in the U.S. Their Prevalence and Significance. Bulletin of National Research Council, November 1943.
Scope and Method Bulletin, cited above, pp. 13-18; 31-42.

Ch. 7. Levels of Consumption

Scope and Method Bulletin, cited above, pp. 8-18.
Dew.—Ch’s. 8, 9, and 10.
Waite—Ch’s. 3, 12, and 13.

Ch. 8. Consumer Income and Income Elasticity

Dew.—Ch’s. 11 and 12.
Woytinsky, W.S., “Relationship Between Consumers’ Expenditures, Savings, and Disposable Income”, Review of Economic Statistics, February, 1946.

Ch. 9. The Consumer Purchases and Related Studies

Waite—Ch’s. 9, 13, 16, and 17.

Ch. 10-11. Administration of Income

Dew.—Ch’s 13 and 14.
Waite—Ch’s 20 and 21.

Ch. 12. The Cost of Living and its Measurement

Bureau of Labor Statistics, The Cost of Living Index of the BLS, and appraisal of “The Cost of Living” by George Meany and R. J. Thomas, labor members of the President’s Committee on the Cost of Living, February 28, 1944.
Bureau of Labor Statistics, Report of the President’s Committee on the Cost of Living, Monthly Labor Review, January, 1945.
Mills, Bakke, Cox, Reid, Schultz, and Stratton (Special Committee of the American Statistical Association), “An Appraisal of the BLS Cost of Living Index”, Journal of the American Statistical Association, December, 1943.
National Industrial Conference Board. A Critical Analysis of the Meany-Thomas Report on the Cost of Living, April 1944.
Waite—Ch. 5.

Ch. 13. Consumer Sovereignty

Dew.—Ch. 15.

PART III—MARKETING ORGANIZATION

Ch. 14. Production Economics Aspects of Marketing

M.B.—Ch’s 6 to 8.

Ch. 15. Approaches to Marketing Organization Analysis

[note: no reading item listed here]

Ch. 16. The Definition of a Market

Fetter, “The Economic Law of Market Areas”, Quarterly Journal of Economics, May, 1924.
Price, Marketing of Farm Products, Ch. 16.
Shepherd, MARKETING OF FARM PRODUCTS, Appendix A.

Ch. 17. Marketing Agencies

M.B.—Ch’s. 9 to 11.

Ch. 18. Classification by Commodities

M.B.—Ch’s. 13 to 15.

Ch. 19. The Census of Distribution

M.B.—Ch’s. 16 to 18.

Ch. 20. The Location of Markets

Dean, W.H., THE THEORY OF THE GEOGRAPHIC LOCATION OF ECONOMIC ACTIVITIES, Edward Brothers, Ann Arbor, Michigan, 1938.
S.D.—Ch. 4.

Ch. 21. Inter-Unit Marketing Organization

M.B.—Ch. 19 and 20.

Ch. 22-23. Intra-Unit Marketing Organization

M.B.—Ch. 36.
S.D.—Ch. 2, pp. 33, 36, 37.
Com.—pp. 86-91.

 

PART IV—MARKET PRICE

Ch. 24. The Function of Market Prices

M.B.—Ch. 32.
Stig.—Ch. 2.
S.D.—Ch. 2.
Waite—Ch’s. 14, 15.

Ch. 25. The Behavior of Prices

Shep.—Ch’s. 1, 2, and 3.
Cassels, J.M.—Ch’s 1, 5, and 9.
Com.—pp. 43-50.
Nicholls—Ch. 18.

Ch. 26. Demand

Stig.—Ch. 6.
Shep.—Ch’s. 4, 5, and 6.
Cassels—Ch’s 1, 6, and 9.
Working, E.J.—“What Do Statistical Demand Curves Show?” Quarterly Journal of Economics, February, 1927.
Waite—Ch. 10.

Ch. 27. Supply

Stig.—Ch’s 7 to 10, inclusive
Shep.—Ch’s. 10 and 11
Black, J.D., “The Elasticity of Supply of Farm Products”, Journal of Farm Economics, 1924.
Cassels—Ch’s 1 and 2.
Cassels, J.M., “The Nature of Statistical Supply Curves”, Journal of Farm Economics, April, 1933.
Mighell, R.L. and Allen, R.H., “Supply Schedules—Long Time and Short Time”, Journal of Farm Economics, August, 1940.
Reynolds, L.G., “The Canadian Baking Industry: A Study of an Imperfect Marekt,”Quarterly Journal of Economics, August, 1938.
Reynolds, L.G., “Competition in the Rubber Tire Industry,” American Economic Review, September 1938.
Waite—Ch. 6.

Ch. 28. Selling Prices under Imperfect Competition

Cassels—Ch’s. 9 and 10.
Nicholls—Ch’s 5 to 11, inclusive
Stig.—Ch’s 11 to 14, inclusive
TNEC—Part I, Ch’s 2 and 3.
Hyson, G.D. and Sanderson, F.H., “Monopolistic Discrimination in the Cranberry Industry”, Quarterly Journal of Economics, May, 1945.
Waugh, F.V. et al, “The Controlled Distribution of a Crop Among Independent Markets”, Quarterly Journal of Economics, November, 1936.
Waite—Ch. 6.

Ch. 29. Buying Prices under Imperfect Competition

Nicholls, Ch’s—16 and 17.
TNEC—Part III, Ch’s 1 and 2.

Ch. 30. Futures markets and Speculation

M.B.—Ch’s. 28 and 29.
Howell, L.D., Cotton Prices in Spot and Futures Markets, USDA Technical Bulletin No. 6851, 1939.
Shepherd, THE MARKETING OF FARM PRODUCTS, Ch’s 9 and 10.

Ch. 31. Price Forecasting

Shep.—Ch’s 7, 8, 9, and 13.

 

PART V—SELLING AND BUYING

Ch. 32. The Selling Function

TNEC—Part I, Ch. 4[?].
S.D.—p. 225.

Ch. 33. Advertising

M.B.—Ch. 23.
S.D.—pp. 225-229.
Borden, Neil, “Findings of the Harvard Study on the Economic Effects of Advertising”, Journal of Marketing, April, 1942.
Waite—Ch. 11.

Ch. 34. The Buying Function

M.B.—Ch. 22.
TNEC—Part I, Appendix 2.
Nicholls, Ch’s. 12-15, inclusive.

Ch. 35-36. Price Policy

S.D.—Ch. 2.
Cassels—Ch. 6.
Nourse—Ch’s 6, 10, and 11.
TNEC.—Part I, Preface and C-h. 1.

 

PART VI—MARKETING MARGINS, COSTS, INCOME, AND EFFICIENCY

Ch. 37. Margins and Costs

S.D.—Ch’s. 2, 6, and 7.
TNEC.—Part III, Ch’s. 2 and 3.

Ch. 38. The Incidence of Marketing Costs

S.D.—Ch’s. 10 and 11, pp. 333-349[?].
Nourse—Ch’s. 8 and 9.
TNEC., Part II, Ch. 1.

Ch. 39. Incomes in Commodity Distribution

S.D.—Ch. 5.

Ch. 40. Marketing Efficiency

M.B.—Ch’s. 37 and 38.

 

PART VII—AUXILIARY FUNCTIONS

Ch. 41. Transportation

M.G.—Ch. 24.
S.D.—Ch. 8, pp. 210-222.

Ch. 42. Warehousing and Storage

M.B.—Ch. 25.
S.D.—p. 225.

Ch. 43. The Financing of Marketing

M.B.—Ch. 27.
S.D.—pp. 229-244.

Ch. 44. The Insurance of Commodity Distribution

[note: no reading item listed here]

 

PART VIII—COOPERATION IN COMMODITY DISTRIBUTION

Ch. 45. Principles and Philosophy of Cooperation as Exhibited in Commodity Distribution

Black, J.D., Cooperative Central Marketing Organization, University of Minnesota Exp. Sta. Bulletin No. 211, April, 1924.
Childs, Marquis, SWEDEN: THE MIDDLE WAY, 1938, (conclusions only).

Ch. 46. Cooperative Selling

M.B.—Ch. 21.
S.D.—pp. 85-94.

Ch. 47. Cooperative Buying and Consumer Organization

M.B.—Ch. 12.
Sorenson, THE CONSUMER MOVEMENT, Ch’s 1, 4-9, inclusive.
Waite—Ch. 18.

 

PART IX—PUBLIC ACTIVITY IN COMMODITY DISTRIBUTION

Ch. 48. The Functions of Government in Commodity Distribution and Prices

M.B.—Ch’s. 37 to 39.
S.D.—Ch. 11, pp. 349-367.
Nourse—Ch’s. 1 to 5 inclusive.

Ch. 49. The Marketing Services

M.B.—Ch’s. 26 and 30.
Waite—Ch’s 6 and 7.

Ch. 50. Government Controls

Nourse—Ch’s 12 to 14, inclusive.
S.D.—Ch. 11; pp. 333-348.

Ch. 51. Price Control

Shep.—Ch’s 14 and 155.
TNEC.—Part III, Ch. 1.

Ch. 52. Marketing Operations

Shepherd, G.S., MARKETING OF FARM PRODUCTS, Ch. 14.

Ch. 53. Intergovernmental Commodity Agreements

Mason, Edward, CONTROLLING WORLD TRADE, McGraw-Hill, 1946, Part II.
Davis, J.S., INTERNATIONAL COMMODITY AGREEMENTS: HOPE, ILLUSION, OR MENACE?, The Committee on International Economic Policy, New York, 1947.
REPORT OF THE DRAFTING COMMITTEE OF THE PREPARATORY COMMITTEE OF THE UNITED NATIONS CONFERENCE ON TRADE AND EMPLOYMENT, United Nations Economic and Social Council. Lake Success, New York, January 20 to February 25, 1947, Ch’s 5 to 7, inclusive.

 

PART X—CONCLUSION

Ch. 54. Outlook and Policy

Com.—pp. 1-42; 51-85.
Dew.—Ch’s 6 and 26.
S.D.—Ch. 11.
Hyson, C.D., “Savings in Relation to Potential Markets”, American Economic Review, December, 1946.
Hyson, C.D., “Maladjustments in the Wool Industry and Need for New Policy,” Journal of Farm Economics, May, 1947.
Waugh, F.V., “Does the Consumer Benefit From Price Stability?”, Quarterly Journal of Economics, August, 1944.

 

Source:  Harvard University Archives. Syllabi, course outlines and reading lists in economics, 1895-2003.   Box 4, Folder “Economics, 1947-1948 (1 of 2)”.

_________________________________

1947-48
HARVARD UNIVERSITY
MIDYEAR EXAMINATION
January 1948
ECONOMICS 7a

Commodity Consumption, Distribution and Prices

Answer No. 1, and 5 of the remaining 6.

  1.      a.  Cite all the conditions that may make competition “imperfect”.
    1. Point out the differences between Maynard and Beckman’s and Stigler’s sets of conditions.
    2. Why do Maynard and Beckman object to the term “imperfect” competition?
    3. Is their objection valid? Give reasons for your answer.
  2.      a.  Explain the statement that “utility has a time dimension,” and show the relevance of this time dimension to determination of the relative productivity of four or five different types of marketing operations or activities.
    1. Comment on the statement: Introducing the time dimension into measurement of utility does not introduce ethical considerations.
  3.      a. Explain and illustrate by a diagram unit elasticity of demand, elastic demand, and inelastic demand.
    1. Explain income elasticity.
    2. Show how demand elasticity and income elasticity are related to each other.
  4.     Outline the four approaches to analysis of marketing organization and indicate the advantages of each.
  5.      a. Make a classification of markets on two or more bases.
    1. Outline briefly the principles that are involved in the location of major types of markets.
  6.      Contrast the marketing systems for farm products and for manufactured products, defining the functions performed by the marketing agencies engaged in each.
  7.     Explain briefly 4 of the following 5:
    1. Standard of living.
    2. Consumer sovereignty.
    3. Inter-unit marketing organization.
    4. Regular wholesaler.
    5. Supplementary relationship.

MIDYEAR EXAMINATION
January 1948
ECONOMICS 107a

Commodity Consumption, Distribution and Prices

Answer No. 1; 4 questions out of the remaining 6 listed above; and 2 out of the following 3.

  1. Explain the aggregate consumption function and the individual consumption function, and show their significance in marketing analysis.
  2. Comment on the several attempts to determine the relative growth of marketing and other forms of economic activity in the United States.
  3. Explain briefly 3 of the following 4:
    1. Indifference curves (as explained, for example, in Stigler’s Chapter 5.)
    2. LePlay’s approach to consumption analysis.
    3. Principal features of the Consumer Purchases Study.
    4. Either Wicksteed’s or Patton’s main lines of thought on consumption economics.

 

Source:  Harvard University Archives. Harvard University. Final Examinations, 1853-2001.Box 15. Faculty of Arts and Sciences, Papers Printed for Final Examinations, History, History of Religions, …,Economics, …, Military Science, Naval Science. January, 1948.

_________________________________

1947-48
HARVARD UNIVERSITY
FINAL EXAMINATION
May 1948
ECONOMICS 7b

Commodity Consumption, Distribution and Prices

(Answer No. 1, and any 5 of the remaining 6)

  1. Outline the basic doctrines of a sound price policy as presented by Nourse. Appraise his doctrines and discuss them critically with particular reference to the price policy and business behavior of the individual firm. (45 minutes)
  2. Explain how the relative elasticities of the demand for Class I and for Class II milk are related to the practice of discriminative marketing. Illustrate with diagram. (27 minutes)
  3. What is the effect of speculation in futures contracts upon commodity prices? Does speculation stabilize prices? Appraise. (27 minutes)
  4. Prices of what types of commodities are flexible, inflexible? Why these differences? (27 minutes)
  5. Outline a group of measures and procedures that will promote efficiency in commodity distribution. (27 minutes)
  6. Discuss cost analysis as a tool of marketing analysis. (27 minutes)
  7. In what ways can cooperation contribute most effectively to efficiency in commodity distribution? (27 minutes)

[Note: examination questions for Economics 107b not included in collection]

Source:  Harvard University Archives. Harvard University. Final Examinations, 1853-2001.Box 15. Faculty of Arts and Sciences, Papers Printed for Final Examinations, History, History of Religions, …,Economics, …, Military Science, Naval Science. May, 1948.

Image Source:  Professor John D. Black in Harvard Class Album 1945.

Categories
Exam Questions Fields Johns Hopkins

Johns Hopkins. Ten comprehensive economics PhD exams, 1965

 

 

This is what a full set (more-or-less) of written comprehensive examinations from a Ph.D. program in economics looks like as of 1965. The archival records from Johns Hopkins University are in pretty good shape for their graduate program. Earlier exams will be transcribed and posted down the road on the installment plan.

Six exams from 1961 are posted here.

____________________

[Handwritten Note:   Christ. FULL SET EXCEPT: 1) Hist of Theory: oral 2) Ops Res: Courses.]

Ph.D. Written Comprehensive Examination in MICROECONOMICS

DEPARTMENT OF POLITICAL ECONOMY
THE JOHNS HOPKINS UNIVERSITY
April 19, 1965

Candidates should answer each question; all questions are assigned equal weight.

  1. “If a price system did not exist, it would be necessary to create one.” Discuss in some detail recent developments in general equilibrium theory (i.e. in the last fifteen years) that have increased and deepened our understanding of the meaning and limitations of this aphorism.
  2. Suppose that a firm, faced with a downward sloping demand curve for its single product, is maximizing its income from sales at an output where total average cost is rising. The firm is then sold on a competitive market to the highest bidder, who—it is assumed—will also maximize his income when he operates the firm.
    1. What considerations will determine the price paid for the firm?
    2. What will be the income of the new owner from operating the firm?
    3. How will the new output compare with the old?
    4. How will the slope of the total average cost curve in its new situation differ from that in the old?
  3. In a letter to Edgeworth, Marshall once wrote: “You know I never apply curves or mathematics to market values. For I don’t think they help much. And market values are, I think, either absolutely abstract or terribly concrete and full of ever-varying (though individually vital) side-issues. Also Ox for market values measures a stock and not a ‘flow’; and I found that if I once got people to use Demand and Supply curves which discussed stocks along this axis of x, they could not easily be kept from introducing the notion of a stock when flow was essential.”
    Discuss the following: (a) the relation of the ideas expressed in this quotation to Marshall’s period analysis of the firm and industry; (b) the Walrasian treatment of the same issues; (c) the current treatments of these issues, as exemplified in good textbooks on price theory; (d) your own opinion of the validity, relevance and usefulness of the distinction which Marshall is making here.
  4. The cost of providing service on a road bridge at a certain crossing of the Chapaqua River is C = dX + e. The consumer demand for the services of the bridge may be expressed as T = f – gX, ignoring differences in types of traffic. The time spent crossing the bridge by the average user is H = a + bX + cX2, and it is assumed that the opportunity cost of the average user is valued at 80 cents per hour.
    What toll should be set on this bridge?
    (C = cost, in dollars; H = time spent on bridge, in hours; T = toll per vehicle, in dollars; X = number of vehicles using bridge; a, b, c, d, e, f, g are constants in the problem.)
  5. “The real content of the equilibrium concept is to be found not so much in the state itself as in the laws of change which it implies.” (John Chipman).
    Would you agree with this characterization? If so, why? If not, why not? Analyse the concepts which are currently used in order to derive laws of change from consideration of equilibrium states.

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Ph.D. Written Comprehensive Examination in MACROECONOMICS

DEPARTMENT OF POLITICAL ECONOMY
THE JOHNS HOPKINS UNIVERSITY
April 20, 1965

[There are 180 points on the exam – allocate your time carefully.]

  1. Choose 4 from the following set of 5 questions. [Each is worth 25 points.]
    1. Suppose you were the Chairman of the Council of Economic Advisers. Outline and defend your policy program for the next year, paying particular attention to the problems of full employment, growth, stability and the balance of payments.
    2. An extremely general form of an investment function may be written as:
      I = f(y, r, k-1, I-1)
      where I = investment, y = income, r = interest rate, k = capital stock.
      Relate this to

      1. the acceleration principle
      2. the Keynes-Hansen stagnation thesis
      3. the Goodwin model of the business cycle
      4. empirical studies of investment behavior
    3. Discuss the present state of empirical knowledge concerning the nature and properties of the consumption function.
    4. Here are two statements by prominent economists:
      1. “That Keynes’ theory of under-employment equilibrium depends on the assumption of rigid wages should be clear to everybody.” G. Haberler, QJE, Nov. 1949, p. 570.
      2. “The numerous remarks throughout the literature that Keynes relied on wage inflexibilities to obtain his results are entirely unsubstantiated.”
        R. Klein, The Keynesian Revolution, 1947, p. 90.

        1. Using a macro model of your choice, present the details of this classical argument.
        2. Either (1) attempt to reconcile these opposing views,
          or (2) pick one side and defend it.
  1. Give two analyses of macroeconomic behavior, (a) for full employment and (b) for unemployment, using the equation MV = Py (or M = kPy) in each case, where M = money stock, V = 1/k = velocity of money, P = price level, y = real income.
  1. Answer all of the following 5 questions (Each is worth 16 points).
    1. “In growth models of the Harrod-Domar type, behavioral shifts toward more saving have a stimulating effect on GNP, yet in a simple Keynesian model, the opposite is true.” Is this contradiction apparent or real?
    2. Attack or defend the following proposition: “Microeconomics and macroeconomics are not two distinct fields, but are one and students should not be asked to study them separately and be examined in them separately.
    3. Briefly summarize the several empirical and theoretical arguments which support the hypothesis that the stock of money willingly held should be a function of the interest rate.
    4. Discuss briefly the “Patinkin controversy” concerning Say’s law and the quantity theory of money.
    5. “Compensatory fiscal policy must have a weaker effect in the short run if consumption depends on ‘permanent income’ than if consumption depends on current income, other things the same.” Discuss.

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Ph.D. Written Comprehensive Examination in AMERICAN ECONOMIC HISTORY

DEPARTMENT OF POLITICAL ECONOMY
THE JOHNS HOPKINS UNIVERSITY
April 22, 1965

Do both questions in Section I and three out of six in Section II.

  1. a. The attached table presents information on an American industry. Discuss the technological change evident in the data. Is the pattern typical of other nineteenth century industries? Does the pattern tend to substantiate Habakkuk’s position?
    1. Choose any open question in American economic history. Discuss the current thought about this problem and propose some feasible approach to the problem which might dispel much of the uncertainty now obvious in the literature.
  2. a. The nineteenth century immigrant was attracted to the United States by the high American standard of living. Discuss.
    1. What were the principle sources of capital for industry and transportation in the pre-Civil War era?
    2. What role did the foreign sector play in American development during the nineteenth century?
    3. Except for short 3-6 year fluctuations, the rate of growth of the United States has remained relatively stable. Discuss.
    4. Discuss and evaluate one development policy followed by the government in the nineteenth century orthe governmental development policies in one area during that period.
    5. A recent proposal suggests that the growth process can be considered in three stages – each characterized by the principle constraint to growth. During the first stage growth is constrained by the insufficiency of skill, during the second by a lack of domestic capital, and during the final stage by considerations of foreign imbalance. Discuss the application of such a theory to the American experience.

Table

Year U.S. Mass. Large Firms
OUTPUT
(Physical Units)
1820 3,053 468
1831 23,046 7,923 1,264
1837 12,632 3,545
1845 17,568 4,843
1849 76,368 29,875 7,221
1855 31,500 9,165
1859 114,825 41,529 10,560
CAPITAL
(Machine Sets)
1820 215 20
1831 1,246 340 52
1837 565 136
1845 817 174
1849 3,527 1,288 254
1855 1,520 331
1859 5,235 1,673 362
EMPLOYEES
1820 153
1831 621 133 12
1837 198 28
1845 207 33
1849 980 287 45
1855 348 54
1859 1,220 385 53

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Ph.D. Written Comprehensive Examination in INTERNATIONAL ECONOMICS

DEPARTMENT OF POLITICAL ECONOMY
THE JOHNS HOPKINS UNIVERSITY
April 23, 1965

3 hours, maximum points 180.

PART I (10 points each). Answer all.

  1. Explain the principle of comparative advantage, and illustrate with a diagram.
  2. Derive the expression giving the equilibrium relationship between the spot exchange rate and the 90-day forward rate in a two country model with interest rates assumed fixed in both countries.
  3. The official U.S. measure of a balance-of-payments surplus or deficit is the “overall balance.” Define the “overall balance” and indicate the principal shortcomings of this measure.
  4. Define “terms of trade” and indicate the significance of the concept.
  5. What is the “transfer problem”?
  6. Derive the expression for the change in national income resulting from an autonomous increase in exports.

PART II Answer 3 out of 5 (40 points each).

  1. Utopia is a small, highly developed country with capital (K) as its only factor of production. Utopia consumes two goods, x1and x2, and its community utility function is given by U=x1x2. Its production function for x1 is x1= a1K, and its production function for x2 is x2= a2Kb. (a1, a2, b are all greater than zero). Its endowment of capital is K. Since Utopia is a small country, it takes the world prices of x1and x2 as given.
    1. For what values of b is it certain that Utopia will produce either all x1 and no x2 or all x2 and no x1?
    2. If b = 1/2, at what world price of x2 in terms of x1 will Utopia produce only x2?
    3. If b = 1/2, at what world price of x2 in terms of x1 will Utopia produce only x1?
  2. It has been argued that a fixed exchange rate system works better the greater the interest elasticity of international capital flows, and that a flexible rate system works better the smaller the interest elasticity. Being careful to define “works better”, discuss the assumptions that might underlie this contention.
  3. “In a purely static analysis it is clear that a country, far from being annoyed, should be delighted when foreign countries “dump” their exports on world markets at low prices. But dumping invariably gives rise to cries of dismay in the country importing the dumped goods, and rightly so. A consideration of the dynamic effects of dumping leads to the conclusion that a protective tariff is justified in this case.” Discuss.
  4. “In a sense, practically all arguments for tariffs are second-best arguments. If it is desired to alter the internal distribution of income, then the “first-best” policy would be to do so by direct taxes and subsidies. If this is not possible (i.e. there is a constraint in tax policy), it may be done by tariff protection. But while this will achieve the aim it will also have side effects which are adverse, and the welfare attained with the tax constraint will not be as high as without it; indeed, welfare could fall. (Corden)
    Discuss the above contention with respect to any possible aim or aims of tariff policy other than income redistribution.
  5. “The verdict, so far, on the various attempts to test the Heckscher-Ohlin trade theory is, quite simply, ‘inconclusive’.” Discuss this with respect to the predictions of the theory and one or more of the tests to which these have been subjected.

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Ph.D. Written Comprehensive Examination in LABOR

DEPARTMENT OF POLITICAL ECONOMY
THE JOHNS HOPKINS UNIVERSITY
April 23, 1965

PART I. (2 hours, 15 minutes)

  1. Why do people travel faster today than they used to?
  2. Some people believe that there has been no technological change in the education “industry”. Others believe that there has been the same rate of technical change in this area as in the rest of the economy. What implication does this have for the question of whether the rate of return on education has changed over time?
  3. G. Lewis maintains that unions have not raised wages in the U.S. by very much. Do you think this is an accurate statement? Are there any circumstances under which unions might have a substantial effect on real wages?
  4. Do you think that there are any circumstances under which the introduction of featherbedding into a collective bargaining agreement would yield a better allocation of resources?

PART II. (45 minutes)

  1. Define, and comment briefly on each of the following terms:
    1. equalizing difference
    2. secondary boycott
    3. structural unemployment
    4. productivity
    5. wage-push inflation
  2. Most Keynesian macro models include the assumption that the supply of labor is infinitely elastic, at least up to full employment, at the existing money wage. Can this macro rigid money wage assumption be reconciled with the micro assumption that only relative prices matter?

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Ph.D. Written Comprehensive Examination in LOCATION

DEPARTMENT OF POLITICAL ECONOMY
THE JOHNS HOPKINS UNIVERSITY
April 24, 1965

Do all three sections.

  1. Choose an unsettled problem in location theory. Discuss and criticize the current state of the literature. How would you proceed in extending the present knowledge concerning this problem?
  2. a. How would you proceed in analyzing the factors influencing the location of a single industry?
    1. Apply your method to some industry.
  3. a. Discuss the effect of external economies on some industry. (You may not use the industry of section II, part (b).)
    or

    1. Discuss and criticize the technique used in measuring the geographical concentration of industry and regional specialization.

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Ph.D. Written Comprehensive Examination in MATHEMATICAL ECONOMICS

DEPARTMENT OF POLITICAL ECONOMY
THE JOHNS HOPKINS UNIVERSITY
April 23, 1965

Answer 4 questions.

  1. The following are well-known equations summarising certain aspects of the behavior of an individual consumer
    \frac{\partial {{x}_{s}}}{\partial {{p}_{r}}}=-{{x}_{r}}\frac{\partial {{x}_{s}}}{\partial M}+{{x}_{rs}}\,\,\,\,\,\,\,\,\left( r,s=1,2,\ldots ,n \right)
    where xj, pjrepresent quantity and prices of the jthcommodity, M represents money income, and  {{x}_{rs}}=\lambda \frac{{{U}_{rs}}}{U}, where U is the consumer’s utility function.

    1. Derive the equations from a standard model of consumer behavior.
    2. Discuss the sign of the term xrr
    3. Give an interpretation of \lambda .
    4. Outline the effects on the equations of replacing U by f(U), where f´(U) > 0 for all U.
  2. Choosing any suitable general equilibrium model which involves both production and consumption, define an equilibrium for the model, set out postulates which are sufficient to guarantee the existence of the equilibrium, and sketch out the role played by each postulate in giving the guarantee of existence.
    What, in your opinion, is the function of proofs of the existence of an equilibrium?
  3. In a linear production model, there are two activities which use three resources in quantities (2, 1, 1) and (1, 3, 1), respectively, per unit activity level. The resources are available in quantities (10, 10, 5.5) at most. Receipts from unit levels of the two activities are (4,3).
    1. Set up the problem of maximizing total receipts in linear programming form.
    2. Write down the dual problem.
    3. The solution is included among activity vectors (4,2), (4.5,1), (3.25, 2.25) and dual vectors (1,0,2) (0,3,1). Identify the infeasible activity vector and the optimal activity vector, giving reasons.
    4. State the maximum prices the firm would be willing to pay for its resources.
    5. Discuss the relationship between dual variables in linear programming theory and prices in economic theory.
  4. Set out the leading properties of square non-negative matrices. Show how these properties are used in economic theory in relation to
    (a) input-out models of Leontief type, and
    (b) stability analysis of multi-market equilibrium.
  5. Carefully describe the Von Neumann growth model, interpreting its chief results and relating them to other, not necessarily linear, multisector growth models.

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Ph.D. Written Comprehensive Examination in MONEY

DEPARTMENT OF POLITICAL ECONOMY
THE JOHNS HOPKINS UNIVERSITY
April 23, 1965

PART I (60 points). Indicate whether each of the following statements is true, false, or uncertain, and explain your answer.

  1. If the quantity theory holds, the level of real output and the price level are independent of the supply and/or mix of non-money financial assets.
  2. At full employment the equation of exchange goes from an irrefutable identity to a useful price-level empirical relationship.
  3. The rate of interest is purely a real phenomenon if money is neutral.
  4. The Treasury should lengthen the average maturity of the public debt when long-term interest rates are low.
  5. The demand for money is a function of the real rate of interest rather than the money rate of interest.
  6. If a commercial bank raises new capital by a common stock issue, its reserves will rise permitting a multiple expansion in the money supply.

PART II (60 points). Listed below are four proposals for new legislation. For each proposal, discuss the probable economic effects were the proposal to be enacted and indicate your views on the desirability of the proposal. (Consider each proposal separately; i.e., as you discuss one proposal assume that none of the others has been enacted.)

  1. Require the Federal Reserve to support the prices of Government securities whenever their yields reach 4 ¼ percent.
  2. Allow commercial banks to pay any interest they deem proper on demand and time deposits.
  3. Require the Federal Reserve to produce a money supply which is as close as is practicable to a 3 percent annual rate growth path.
  4. Provide that members of the Board of Governors of the Federal Reserve System may be appointed to, or removed from, office at any time by the President of the United States.

 

PART III. (60 points). Answer two.

[Handwritten note: THIS PAGE WAS NOT GIVEN. (i.e. Part III)]

  1. “Economists are frequently skeptical about the effects of price flexibility in goods markets because they feel that price declines will lead to expectations of further price declines resulting in a reduction in consumption. If expectations as to future prices of long-term bonds are determined in a similar way, the liquidity trap will not exist and, in fact, the economy will be very sensitive to changes in monetary policy.” Discuss.
  2. Today, monetary policy is generally considered to be useful for dealing with economy-wide stabilization problems but not with regional stabilization problems; overheated regions and depressed regions must be treated with different medicines. But the Federal Reserve System consists of twelve regional banks and its founders thought a regional monetary policy was possible. What economic conditions would have to prevail before a regional monetary policy would be possible?
  3. Outline the major aspects of the Gurley-Shaw hypothesis, and discuss its merits. What empirical observations would lead you to accept or reject the hypothesis? (Is the fact relevant that in recent months the rate of growth of money supply plus time deposits has remained unchanged while the rate of growth of money supply alone has declined substantially?)

    ____________________

Ph.D. Written Comprehensive Examination in PUBLIC FINANCE

DEPARTMENT OF POLITICAL ECONOMY
THE JOHNS HOPKINS UNIVERSITY
April 24, 1965

PART I (40 min.)

For each of the following indicate whether the statement is true, false, or uncertain, and then explain your reasoning. (Statements in parentheses may be taken as correct.)

  1. (In a suburban Los Angeles owner-occupied housing development in a recent year, real estate tax payment as a fraction of annual family income was higher for lower-income families than for higher-income families.) The foregoing fact shows that the residential real estate tax is a regressive tax.
  2. There is no advantage or disadvantage to the investor in holding tax-exempt municipal bonds because market demands will have adjusted so as to equate the after-tax yields on the two.
  3. (Available empirical evidence indicates that the after-tax rate of return on equity in the corporate sector has changed very little since the late 1920’s despite the fact that the corporate income tax rate has increased from 11% to over 50%.) From this evidence one can conclude that the effect of the tax has been to raise corporate product prices or to lower the prices of corporate-hired factors of production, or some combination of these two, so that the tax has been simply shifted away from corporate profits with no change in resource allocation.
  4. Marginal cost pricing should be employed for all public utility undertakings.

 

PART II (70 min.) Answer any 2 of the following:

  1. Discuss briefly the issues raised by the proposal of Mr. Heller (former chairman of the Council of Economic Advisers) to transfer certain Federal tax receipts to the states.
  2. Discuss briefly the consequences of Representative Patman’s proposal to finance the Great Society by a loan of $25 billion from the Federal Reserve to the Treasury at an interest rate of ¼ of 1% per year.
  3. Discuss the likely impact of the current proposal to reduce excise taxes upon
    1. The level of aggregate demand
    2. The degree of automatic stabilization of the economy
    3. The distribution of income if taxes on luxury items are eliminated.
  4. Compare, contrast, and evaluate the effects and merits of the following programs to stimulate investment:
    1. Militant easy money programs
    2. Tax inducements such as
      1. Accelerated depreciation
      2. Investment tax credits
      3. Shifts to consumption-expenditure taxation away from income taxation.

 

PART III (70 min.) Answer any 2 of the following:

  1. Indicate the role of government in promoting economic growth in the following models:
    1. Neo-classical models of economic growth à la Solow.
    2. Fixed-proportions models à la Domar.
    3. An economy where government stabilization policy is required to maintain full employment.
  2. Define a public good; a social want. What special problems do they pose to a government which is interested in both resource allocation and optimal income distribution?
  3. Two countries decide to join in an economic union. They wish to have free trade and optimal resource allocation within the union.
    1. One country has a tax system relying solely on a value-added tax and the other one has a proportional income tax. Would an adjustment to exporters or importers be necessary for these taxes?
    2. Suppose the taxes were a value-added tax and a proportional tax on consumption. Would your answer be the same?
  4. How could the government use fiscal measures to improve resource use in transportation?

____________________

Ph.D. Written Comprehensive Examination in ECONOMETRICS

DEPARTMENT OF POLITICAL ECONOMY
THE JOHNS HOPKINS UNIVERSITY
April 24, 1965

Part I

Define or explain briefly:

  1. multicollinearity
  2. consistent estimator
  3. asymptotically efficient estimator
  4. asymptotic variance of an estimator
  5. asymptotically normally distributed estimator
  6. best linear unbiased estimator
  7. Monte Carlo study
  8. specification bias
  9. specification error
  10. autoregressive disturbances

 

Part II (answer two out of three)

  1. Write an essay on the identification problem in which you indicate (a) the definition of “identification”, (b) why the problem arose in the economic literature rather than in the broader statistical literature, (c) the relation of identification to estimation, and (d) some of the important theoretical results concerning identification criteria. In (d), be careful to state carefully the assumptions on which the results rest.
  2. Describe the two-stage least squares estimator in words. Then write down a mathematical expression for it, defining your symbols.
  3. Discuss some of the principal difficulties in estimation that are sometimes encountered when disturbances are serially dependent, and indicate under what circumstances each arises or does not arise. Indicate also what techniques (if any) are available to deal with each difficulty, and how they deal with the difficulty.

 

Part III (answer two out of four)

  1. Suppose that current consumption ct were a linear function of current expected income yet, with an additive disturbance ut that is serially independent with mean zero and constant variance. Suppose also that current expected income is a weighted average of current actual income yt and lagged expected income ye,t-1, with constant weights and with an additive disturbance vt that is independent of ut and serially independent with mean zero and constant variance. Suppose also that income is exogenous. What problems would be encountered in the attempt to obtain consistent and asymptotically efficient estimators of the slope and intercept of the consumption function described? What information and techniques would enable you to solve them? Explain.
  2. Discuss the effects of multicollinearity upon the estimation of parameters by ordinary least squares. In your discussion assume that the distribution of disturbances is spherical and that the regressor observation matrix X is fixed in repeated samples.
  3. Specify the necessary conditions under which the method of instrumental variables provides consistent estimators in circumstances where ordinary least squares fails to do so.
  4. If a regressor is correlated with the disturbance then classical least squares estimation will result in a biased estimator of the influence of variations in the regressor on variations in the regressand. What can you say about the direction and extent of this bias?

 

Source:  Johns Hopkins University, Eisenhower Library, Ferdinand Hamburger, Jr. Archives. Department of Political Economy, Series 6, Box 1, Folder “Comprehensive Exams for Ph.D. in Political Economy 1947-1965”.

Image Source: From the Johns Hopkins University seal on the cover of the 1966 yearbook Hullabaloo.

Categories
Courses Curator's Favorites Exam Questions Lecture Notes M.I.T. Problem Sets Suggested Reading Syllabus Uncategorized Undergraduate

M.I.T. Principles of Macroeconomics. Slides, problems sets, exams. Krugman, 1998

 

One might think that putting together robust links to economics course materials found in the internet archive, Wayback Machine, would be relatively straightforward, and sometimes it is. But most of us are inconsistent with the use of folders and sometimes pages get updated by other people so that traditional archival persistence is generally required to find missing pieces to the historical puzzle. In any event, today’s post manages to pack links to course content for a principles of macroeconomics course taught at M.I.T. exactly two decades ago by Paul Krugman.

I remember that semester well, because immediately after Paul Krugman finished his teaching obligations at M.I.T. for that fall term, he came to Berlin to receive an honorary doctorate from Freie Universität Berlin. The audio recording to his lecture “The return of demand-side economics” can still be heard (beginning around minute 2:00) at a webpage maintained by the John-F.-Kennedy Institute for North American Studies of Freie Universität.

_________________

14.02 Principles of Macroeconomics
Fall 1998
Professor Paul Krugman

Course Syllabus

Text: Olivier Blanchard, Macroeconomics.

Schedule (with links to lecture slides and exams)

Note: the lecture slides may differ slightly from those presented in class.

September 14 — Chapter 2: Preliminary Concepts

Slides: Tracking the Macroeconomy: Five Key Aggregates

September 16 — Chapter 3 & 4: The Goods Market (lecture by Roberto Rigobón)

September 21 — Chapter 5: Financial Markets

Slides: Review. Multiplier Analysis

Handout by Adam B. Ashcroft on bond yields about here

September 23 — Chapter 5: More on Financial Markets

Slides: The Federal Reserve and the Money Supply

September 28 — Chapter 6: IS-LM

Slides: The IS-LM Model

September 30 — Chapter 7: Expectations

Slides: Expectations and Macroeconomics

October 5 — Chapter 8: Expectations, Consumption, and Investment

Slides: Consumer Behavior–Not that simple

October 7 — Banks and the Banking System

Slides: Banking and the Financial System

October 8
Exam 1

Exam #1 Questions
Solutions

October 13 — Chapter 9: Expectations and Financial Markets

Slides: (missing)

October 14 — Chapter 10: Expectations and Policy

Slides: Expectations and Macroeconomic Policy 

October 19 — Chapter 11: Introduction to the Open Economy

Slides: The Open Economy

October 21 — Chapter 12: The Open Economy Goods Market

Slides: Macroeconomics in the Open Economy

October 26 — Chapter 13: Interest Rates and Exchange Rates

Slides: What Determines Exchange Rates

Handout on exchange rates about here.

October 28 — Chapter 13: Exchange Rate Regimes

Slides: Fixed Exchange Rates

November 2 — Chapter 14: Expectations, Crises, and General Mayheim

Slides: (missing)

November 4 — Chapter 15: The Labor Market

Slides: Why Study the Labor Market?

November 5
Exam 2

Exam #2 review
Exam #2 questions
Solutions

November 9 — Chapter 16: General Equilibrium

Slides: Putting It All Together–AS-AD

November 16 — Chapter 17: The Phillips Curve

Slides: From Aggregate Supply to the Phillips Curve

November 18 — Chapter 18: Disinflation

Slides: Long-run Unemployment-Inflation Dynamics [note: “?” for the greek letter pi, i.e. rate of inflation]

November 23 — Chapter 19 & 21: Seigniorage and Devaluation

Slides: Inflation, Interest Rates, and Hyperinflation

November 25 — Chapter 22 & 23: Long-run Growth

Slides: Economic Growth

November 30 — Chapter 24: Technical Progress

Slides: Savings, Investment, and Growth

Handout on growth about here.

December 2 — Chapter 20: Great Depression and European Unemployment

Slides: High Unemployment and Growth Slowdowns 

December 7 — Zuckerman & Krugman Foreign Affairs articles (lecture by Roberto Rigobón)

[Paul Krugman, Debate: America the Boastful, and Mortimer B. Zuckerman, Debate: A Second American Century,  Foreign Affairs (May/June 1998)]

December 9 — Course Review

Slide: Overview Graphic [Note: graphic cut-off on right hand side]

Final Examination (December, 2018)

Final Exam Review
Pablo Garcia’s Review
Final Exam Questions 

 

Problem Sets

Set Number Assigned Due Returned
1 9-11 9-18 9-21
2 9-18 9-25 9-28
3 9-25 10-2 10-5
4 10-9 10-16 10-19
5 10-16 10-23 10-26
6 10-23 10-30 11-2
7 11-6 11-13 11-16
8 11-13 11-20 11-23
9 11-20 12-4 12-7

 

Problem Set 1
Solutions

Problem Set 2
Solutions

Problem Set 3
Solutions (missing)

Optional Problem Set 1
Solutions

Problem Set 4
Solutions

Problem Set 5
Solutions

Problem Set 6
Solutions

Problem Set 7
Solutions

Optional Set 2
Solutions

Problem Set 8
Solutions

Problem Set 9
Solutions

Optional Set 3
Solutions

 

Image: Photograph taken in December 1998 at Cecilienhof, Potsdam (Germany). Irwin Collier and Paul Krugman.

Categories
Cambridge Exam Questions

Cambridge. Economics Tripos Examinations, 1921

 

The following eighteen examinations constituted the Economics Tripos at Cambridge University in 1921. Fifteen exams covered economic theory, policy, history and statistics with three exams covering politics and international law.

Previously posted Cambridge economics exams have been posted at the following links:

Guide to Moral Sciences Tripos 1891
Economics Tripos 1931
Economics Tripos 1932

___________________

ECONOMICS TRIPOS
PART I

Monday, May 30, 1921. 9–12.
GENERAL ECONOMICS. I.

  1. Comment on the following passage: “Les vérités d’économie politique pure fouruiront la solution des problèmes les plus importants, les plus débattus et les moins éclairés d’économie politique appliquée et d’économie sociale.”
  2. “Prices may be determined over a short period by demand and supply; but in the long run they are governed by the superior force, Cost of Production.” Comment on this statement.
  3. What do you understand by the term, Joint Products? Would you apply the term to the production of chocolate and cocoa by the same factory? What principles govern the prices of Joint Products?
  4. “The ordinary progress of a society, which increases in wealth, is at all times tending to augment the incomes of landlords.” Discuss this statement. What effect would you expect a great development of internal transport facilities to exert upon urban rents?
  5. Consider the relative advantages of wages settlements for any industry (a) upon a uniform national basis, (b) upon varying district bases.
  6. Compare the attempts of trade unions to raise wages with those of combinations to raise prices as regards (a) the methods which they employ, (b) the economic conditions of their success.
  7. Distinguish the various types of business which it is customary to describe as Cooperative, indicating in each case the strong and weak points and potentialities of future development.
  8. Comment on the following passage: “General low wages never caused any country to undersell its rivals; nor did general high wages ever hinder it from doing so.”
  9. Is there any inconsistency between the views that the foreign exchanges are determined (a) by the demand for and supply of bills of exchange, (b) by the relative purchasing power of the currencies of the countries concerned? What do you consider the correct view of the matter?
  10. “It is impossible for any country to finance a great war without an inflation of the currency.” Discuss this statement.

 

Monday, May 30, 1921. 1½–4½
RECENT ECONOMIC AND GENERAL HISTORY OF THE UNITED KINGDOM AND THE BRITISH EMPIRE.

  1. Show how Adam Smith’s Wealth of Nations influenced the economic policy of England. What influence had it outside England?
  2. Outline the different measures which have been taken since 1783 for reducing the burden of the National Debt.
  3. What were the main objects which Mr. Gladstone had in view, when selecting the sources from which his revenue was to be derived?
  4. What light is thrown by railway and banking history on the attitude of Parliament towards monopoly?
  5. How far was the distress of the hand-loom weavers and frame-work knitters in the middle of the nineteenth century caused by the introduction of steam power?
  6. What happened to the surplus agricultural population which before the Poor Law of 1834 was maintained, wholly or in part, at the expense of the parish?
  7. (a) “Down to 1870 England’s colonial policy was a policy of drift.”
    (b) “The theorists of 1830 were animated by a mastering passion for liberty, and it is because they succeeded in making it the basic principle of England’s colonial policy that the British Empire is to-day a fact of such cardinal importance in the world.”
    Which seems to you the more correct view, and why?
  8. “The discovery of gold precipitated Australia into manhood.”
    Discuss this; and point out the social problems confronting a new country which possesses precious metals in abundance.
  9. Describe the chief forms of land tenure existing in India, and account for their diversity.
  10. Examine the methods which have been adopted in different parts of the British Empire for the avoidance and settlement of industrial disputes.

 

Tuesday, May 31, 1921. 9–12.
SUBJECTS FOR AN ESSAY.

  1. “Une extrême justice est souvent une injure.”
  2. “In all essentials the problem of industrial peace resembles that of international peace.”
  3.  “The economic relationship of nations is essentially one of cooperation, rather than of rivalry: the prosperity of each country is to the advantage of the others.”
  4. “The nineteenth century was the outcome of French ideas and English technique.”
  5. The Restoration of the Gold Standard.

“From this unrest, so, early wrecked,
A future staggers crazy,
Ophelia of the Ages, decked
With woeful weed and daisy.”

 

Tuesday, May 31, 1921. 1½–4½.
RECENT ECONOMIC AND GENERAL HISTORY OF EUROPE AND THE UNITED STATES.

  1. Contrast the map of Europe, as it was in 1815, with the map of Europe as it is to-day.
  2. To what causes do you attribute the instability of the political institutions of France between 1789 and 1870?
  3. “The German Empire was built more truly on coal and iron than on blood and iron.”
    What evidence is there to support this statement?
  4. “Le Gouvernement provisoire de la République française s’engage à garantir l’existence de l’ouvrier par le travail;
    Il s’engage à garantir du travail à tous les citoyens.” (Moniteur du 26 fevrier 1848.)
    What was the origin of this decree, and to what did it lead?
  5. “Gewiss ist es der Kaiser gewesen und konnte nur der Kaiser sein, der den Fürsten schliesslich entlassen hat, aber die moralische Autorität des Mannes, der das deutsche Reich geschaffen und 27 Jahre an der Spitze der Regierung gestanden hatte, war so ungeheuer, dass es für den Kaiser, der noch so wenig Regierungserfahrung hatte, eine moralische Unmöglichkeit gewesen wäre, sich von ihm zu trennen, wenn nicht eben der Kanzler durch sein Verhältniss zur Majorität des Reichstags sich in eine unhaltbare Position gebracht hätte.”
    Do you agree with this explanation of Bismarck’s dismissal? Give reasons for your answer.
  6. “In France the average unit of agriculture remains as small as ever it was, and its typical manager is still the working peasant or the very small farmer.”
    Why is it that the small farmer has held his own so successfully in France?
  7. Outline the main stages in the growth of the German Zollverein.
  8. Compare the railway systems of Germany and the United States, with particular regard to
    (a) the purposes for which they were planned;
    (b) the part played by the State in their development and control.
  9. How was it that the United States, which Huskisson regarded as our most serious shipping rival, had so small a mercantile marine in the second half of the nineteenth century?
  10. Why were the attractions of Canada, as a field for immigration, inferior to those of the United States during the greater part of the nineteenth century?
  11. What were the chief issues between North and South which led to the American Civil War?

 

Wednesday, June 1, 1921. 9–12.
GENERAL ECONOMICS. II.

  1. “If we wish to get a clear view of English industrial inefficiency at the present time we have only to contrast the average output per worker in American industrial establishments with the average output in English establishments; or to set side by side the average output of each cotton spindle employed in Japan with the corresponding figure for English spindles. In both comparisons England’s position is unsatisfactory almost beyond belief.” Criticise this argument.
  2. What meanings can be attached to the statement that a country is “over-populated”? In what sense, if any, can the statement be applied to this country at the present day?
  3. “The socialistic activities of modern states, by checking the natural play of those forces that tend to bring about the elimination of the relatively unfit, threaten a progressive deterioration of the qualities of the race.” Discuss this statement.
  4. Indicate the chief difficulties in the way of estimating accurately the change in the real earnings of any group of wage-earners in 1921, as compared with 1914.
  5. Are trade unions well advised (a) in attempting to prohibit the entry of female workers into specific occupations, (b) in insisting on equal pay for male and female workers in occupations where both are normally employed?
  6. “Plasticity of wage rates would be the sovereign remedy for the evil of unemployment.” Discuss this view.
  7. Analyse the various causes, both temporary and relatively permanent, which may bring about a disparity between a country’s recorded exports and imports. Illustrate from actual instances.
  8. Discuss the effects of increasing supplies of gold upon the short period and the long period rate of interest in a gold-standard country.
  9. “It is not an essential part of the principle of a gold standard that gold coins should freely circulate within the community adopting that principle, or even that gold coins should be freely minted.” Discuss this statement.
  10. “If all citizens were intelligently alive to their own interests and could also be depended on to be strictly honourable in all their dealings with the State, no taxes on commodities would be tolerated.” Comment.

 

Wednesday, June 1, 1921. 1½–4½.
EXISTING POLITICAL INSTITUTIONS.

  1. “Distrust of the elected legislature is the outstanding feature of the new German constitution.” Discuss this statement.
  2. Compare the functions and the effective powers of the Senate of the United States with those of any one other existing Senate.
  3. Indicate the limitations under which the Referendum is usually instituted, giving reasons for the precautions adopted.
  4. Contrast, in broad outline, the stages by which responsible government has been developed in the Dominions with the steps taken towards its establishment in India.
  5. Describe the relations of the Executive and the Legislature in modern Switzerland. What are their chief advantages and drawbacks? How far could the same system be made applicable in England?
  6. “British and American constitutionalism especially safe- guards the independence of the judiciary in order to ensure the liberty of the subject; European practice aims rather at rendering the powers of the administrators of the law effective against the individual with a view to the safety of the State.” Indicate the extent to which this may be considered a correct statement.
  7. “In America the President and his Cabinet possess executive and administrative functions only; the British Cabinet’s essential functions are of a widely different character.” Comment.
  8. “A written constitution is not the same as a rigid constitution.” Explain this dictum, illustrating from existing constitutions.
  9. Compare Canada with either Australia or the United States as a type of federal state.
  10. In what various ways are the powers of local authorities limited and controlled in the United Kingdom?
  11. “In a unitary state it is impossible to maintain two co-equal legislative chambers.” Comment on this.

 

Thursday, June 2, 1921. 9–12.
GENERAL ECONOMICS. III.

  1. “Eine Grubenabgabe keine Rente ist, mag sie auch oft so genannt werden. Denn ausgenommen den Fall, dass Gruben, Steinbrüche und so weiter praktisch unerschöpflich sind, muss der Überschuss ihres Ertrages über die direkten Auslagen zum Teil wenigstens als der Preis aus dem Verkaufe aufgespeicherter Güter angesehen werden.” Comment on this statement.
  2. “C’est un fait remarquable dans le cas de l’or, que d’un côté les prix des marchandises ayant augmenté depuis 1914 à cause de la diminution sur le marché et pour des autres raisons, la puissance d’achat de l’or à l’égard de ces marchandises a diminué et que d’un autre côté, l’or fait prime parce que de nombreux pays—spécialement les pays d’Asie—montrent une préférence marquée en sa faveur.” Indicate the phenomena thus summarised and investigate the conclusions arrived at.
  3. “It is often said that a high rate of interest hampers production and makes it dearer. This is false.” Examine this view.
  4. Is it to the advantage of a country like Great Britain that its people should invest abroad a large proportion of their annual savings? Discuss the probable economic consequences of attempts to restrict the export of capital.
  5. Examine the effect upon international trade of the payment of a large indemnity by one country to other countries. Is it the case that Great Britain could only receive an indemnity from Germany by increasing her imports of German goods to a corresponding extent?
  6. “A vast unfunded debt is a standing menace to the stability of the banking and currency position.” Discuss.
  7. What data would you require in order to form an opinion as to whether the inhabitants of any European country were under-taxed or over-taxed in comparison with those of other countries?
  8. “Monopolistic combinations promise both steadier levels of prices and steadier conditions for the wage earner than can be expected under the present system of anarchic competition.”
    Discuss this opinion.
  9. “There can be no rise in the value of labour without a fall of profits.” Ricardo. Critically examine this theory.
  10. Discuss the economic significance and consequences of modern advertising.
  11. Comment on the following: “The art of making yourself rich in the ordinary sense is equally and necessarily the art of keeping your neighbour poor.” Ruskin.

 

PART II

Monday, May 30, 1921. 9–12.
ECONOMIC PRINCIPLES.

  1. Write short notes on (a) elasticity of demand and supply, (b) consumer’s surplus, (c) economic rent, (d) quasi-rent.
  2. What determines the selling price of an article under conditions of (a) free competition of purchasers and producers, (b) monopoly?
  3. Examine the relation between the rate of interest and the supply of capital in various classes of investment.
  4. Define “normal profits,” and explain the part played by this conception in Marshall’s theory of distribution.
  5. Consider the advantages of fixing wages on a sliding scale based (a) on the cost of living, (b) on the selling price of the product of the industry, (c) on the aggregate output of the industry. Give instances of each method.
  6. Consider the arguments for and against a countervailing import duty on goods imported from a country, of which the currency is greatly depreciated in terms of the currency of the importing country.
  7. Would it be beneficial if a State Bank, having the right to issue inconvertible notes, were to make loans for all approved purposes without interest, provided the borrower was able to furnish war loan or similar stock with a 10 per cent, margin as security? Frame your answer so as to persuade a person inclined to hold the opposite view to your own.
  8. What would be your test of over-population? Apply it in a general way to present conditions in India, Germany, England and the United States.
  9. “On peut trouver entre les faits d’ordre économique des relations de dépendance que l’on peut essayer d’exprimer par des formules algébriques, alors même qu’on ne pourrait pas les traduire en chiffres.”
    Give three or four examples of this.
  10. “Kapital ist der Teil des Vermögens, welcher, selbst Produkt menschlicher Arbeit, wieder zur Produktion bestimmt ist. Nach dem Sprachgebrauche liegt sowohl der Begriff des Vorrats für künftige Nutzung, wie der des Erwerbsmittels darin doch erscheint es richtiger, das Kapital im Gegensatz zur Natur als bestimmten Teil des Vermögens hinzustellen und den Nachdruck auf die Art der Verwendung zu legen, welche die Güter finden sollen, weil sich so die schärfste Abgrenzung des Begriffs durchführen lässt. Es sind nicht darunter zu begreifen die Güter, deren Wert nicht geschätzt werden kann, wie persönliche Fähigkeiten, der Staat usw. und die freien Güter.”
    Restate the salient points of this definition in your words, and point out the respects in which a different view has been or might be taken.

 

Monday, May 30, 1921. 1.30–4.30.
THE ECONOMIC FUNCTIONS OF GOVERNMENT.

  1. “Now that Public Finance is deliberately used as an engine for the redistribution of wealth, the conception of justice in taxation has become meaningless.” Examine this view.
  2. On what principles should the cost of elementary education be distributed between the National Exchequer and the Local Authority concerned?
  3. Consider the case for the State endowment of motherhood.
  4. “Taxes on business transactions are open to all the same objections as taxes on commodities, and should be entirely abolished.” Consider this contention.
  5. Investigate the view that even in ordinary times the State should control the price and ration the supplies of essential articles of food.
  6. How far can the allocation of public funds be made in such a way that the marginal pound will yield equal advantage in each direction of public expenditure?
  7. Discuss with illustrations the obligation which rests on a modern State to take steps to conserve the wasting natural resources contained within its borders.
  8. “A municipality should not undertake to supply any article or service unless it is prepared to become the sole supplier.” Do you consider that this advice is sound?
  9. “In einer Zeit, in der man eifrig nach neuen Steuereinnahmen Umschau zu halten hat, ist es begreiflich, dass insbesondere angesichts der Umwerfungen der Werte in rasch aufblühenden Gemeinwesen nicht nur bei radikalen Bodenreformern, die zunächst eine Verstaatlichung des Bodens, eine Wertzuwachsteuer immerhin als Abschlagszahlung wünschten, sondern über diese Kreise hinaus der Ruf ertönte nach einer Steuer die 1. mühelos erworbene Gewinne für die Gesamtheit möglichst stark mit Beschlag belegen sollte, 2. auf die Benützer des Bodens nicht überwalzbar erschien.” Discuss.
  10. “Entre les trois procédés de couvrir les dépenses de la guerre par l’impôt, par l’emprunt, ou par l’association des deux, M. Helfferich est demeuré bien en arrière de ses collègues d’Angleterre et même de Russie. L’Angleterre a couvert par les recettes de l’impôt 25% des énormes dépenses de guerre.”
    Consider the arguments for the various policies pursued by the belligerents in this respect.

 

Tuesday, May 31, 1921. 9–12.
STRUCTURE AND PROBLEMS OF MODERN INDUSTRY.

  1. “The liner she’s a lady.”
    “The black Bilbao tramp.”
    Explain the problem of ocean freights, as between these two services.
  2. Discuss the advantages of the holding company and the merger respectively as methods of combination, (a) with reference to industrial efficiency, (b) from the financial standpoint.
  3. Consider the problem of “Key industries,” (a) as to definition, (b) as to a right policy of development.
  4. Describe the prevailing systems of land tenure in England. What is there to be said in favour of the landlord?
  5. “Unfair methods of competition are hereby declared un- lawful.” (Federal Trade Commission Act, Sect. 5.)
    By what principles should a Court be guided in enforcing this clause? Illustrate by reference to special practices.
  6. What features of the existing structure of industry lead to proposals for the limitation of profits ? Give instances of such proposals, and discuss their effects.
  7. Suppose a scheme to be established for the benefit of operatives, e.g. in the cotton or in the engineering industry; how would you define the “industry” for this purpose? Show by examples the problems which would arise.
  8. Compare the organisation of the Cotton and the Wool Textile Industries as regards (a) the market for the raw material, and (b) the market for the finished articles.
  9. On what grounds has the present organization of the British coal industry been criticised from the standpoint of efficiency?

 

Tuesday, May 31, 1921. 1.30–4.30.
DISTRIBUTION AND LABOUR.

  1. Examine the probable effect on the real incomes of house-owners if the cost of building increases, other prices generally remaining unchanged, (a) when there is no legal restriction on rent, (b) under such an act as is now in force.
  2. Suppose a gradual transference in income, owing to rising prices and wages, from owners of securities bearing fixed rates of interest to workmen. How is the rate of saving affected, and what are likely to be the ultimate effects on national income if the transference results in a higher standard of living for workmen?
  3. Discuss the incidence of compulsory provision of insurance against (a) unemployment, (b) sickness, if the contributions are paid in part by the state, in part by employers and in part by wage-earners.
  4. Examine the conditions under which the establishment of a minimum wage in an industry does not result in diminution of employment, illustrating your answer from the experience of Australia or of the Trade Boards Acts in the United Kingdom.
  5. Among the effects of the wage-changes in 1915 to 1920 were the diminution of inequalities of wages between industries, between occupations and between localities. How far were such inequalities due to economic causes and how far to custom or to accident?
  6. A workman’s needs generally increase between the ages of 20 and 40, while in many occupations wages are irrespective of age. Can any methods be suggested by which this anomaly can be avoided?
  7. The causes of poverty can be roughly classified as economic or personal. Indicate some methods by which trade organisation can remove the former and state organisation the latter.
  8. Analyse the difference between the methods of settling wage disputes by compulsory arbitration, voluntary arbitration, and such organisations as Whitley Councils, giving illustrations from the practice of this or any other country.
  9. During the generation before the war there is evidence of a steady increase of the number of salaried persons relatively to the number of wage-earners. Consider the effects of this tendency on the statistics of the growth of the national income as they are usually classified.

 

Wednesday, June 1, 1921. 9–12.
MONEY, CREDIT, AND PRICES.

  1. Write a brief essay on the Quantity Theory of Money, describing in outline at least two methods of approach, and stating which you yourself prefer.
  2. State the chief theoretical difficulties in compiling an index number of the cost of living which shall be valid for comparisons between different places over a considerable period of time. Is there any important theoretical distinction between “cost of living” index numbers and index numbers of the value of money generally?
  3. Analyse and compare the different ways in which the term inflation is used by the wise and the foolish.
  4. How do you explain the fall of prices during the past twelve months? Do you expect it to continue?
  5. Compare the position of the U.S. Federal Reserve Board in the banking system of the U.S. with that of the Bank of England in the British system.
  6. Give an account of the probable career from start to finish of a cotton bill drawn to finance the purchase of American cotton by a Liverpool merchant.
  7. Give a careful account of the chief factors which influence the foreign exchanges, and forecast, with your reasons, the probable level of the dollar, franc and mark exchanges six months hence.
  8. Restate the theory of international trade for the case of a set of countries of which the currencies are not on a gold basis but consist of unrelated inconvertible paper moneys.
  9. Make practical proposals for obtaining from Germany as large as possible a sum in payment of Reparation.

 

Wednesday, June 1, 1921. 1.30–4.30.
SUBJECTS FOR AN ESSAY.

  1. The Money Motive.
  2. Business men in politics.
  3. Frontiers.
  4. Types of national leadership in Industry.
  5. Education and Industry.
  6. Bolshevism.

 

Thursday, June 2, 1921. 9–12.
MISCELLANEOUS ECONOMIC QUESTIONS.

  1. “Light is the sovereign antiseptic, and the best of all policemen.” Do you regard this maxim as an adequate guide for the State to follow in its dealings with industrial combinations?
  2. Consider how far the ordinary arguments against artificial interference with prices are relevant to arrangements for controlling the price and rationing the supplies of bank loans.
  3. “The great national Trade Unions, by their insistence on uniformity of conditions, are really hindering the workman in his attempt to better his lot and to secure a greater share in the government of industry.” Comment on this opinion.
  4. Examine the view that there is a danger of experiments in scientific management being carried further than the true interest of the nation demands.
  5. “The policy of giving subsidies to unemployed workmen necessarily involves inflation of currency, and therefore aggravates the evils it is designed to cure.” Discuss this statement.
  6. In what ways, if any, could the State usefully intervene to check the wastes caused by competitive advertisement?
  7. Examine the arguments for compelling railway companies to carry workmen going to and from their work at unremunerative rates.
  8. Consider the proposal that wage agreements negotiated by bodies representing the majority of employers and employed in any trade should be made legally binding on the remainder of the trade.
  9. Can you suggest any practicable scheme for the issue of an international currency by the League of Nations, in order to facilitate the resumption of international trade?

 

Thursday, June 2, 1921. 1.30–4.30.
THE THEORY OF STATISTICS.

  1. “The precision of the average of the measurements of n objects selected at random from a large group is proportional to \sqrt{n}.” Explain carefully the meaning of this statement, discuss the conditions under which it is true, and give examples of its use.
    What modification is needed if n/N is not negligible, where N is the number of objects from which selection is made?
  2. How does the analysis, which gives the ordinate of the normal curve of error as the limit of nCpn+xppn+xqqn-x when n is great, break down if pn is not great, and what is the resulting form?
  3. Distribution according to age of railway guards.

Age

Number of persons per 1000

Under 15 years

0

15—

 8
20—

48

25—

252

35—

 334
45—

223

55—

 125
65—

10

75 and over

0

1000

Estimate by any method of interpolation the relative numbers in the age groups 30 to 35 and 35 to 40 years. State the hypotheses on which the method rests.

  1. For the frequency group in question 3 calculate the average, median and mode, and obtain one measurement of deviation and of asymmetry.
    Give a verbal description of the group, using your results, in language which avoids technicalities as far as possible.
  2. A six-faced die is thrown seven times; the numbers of the pips shown in the first five throws are added (x) and also of those shown in the last five (y). Show that if the experiment is repeated the value of the product-sum coefficient of correlation between x and y tends to be 3/5.
    Discuss the question whether any useful meaning can be given to the coefficient of correlation (obtained by the product-sum formula) in a case where nothing is known of the genesis of x and y and their distribution is not normal.
  3. Describe any one method by which association between non-measurable attributes (such as intellectual ability of pairs of brothers) can be tested, and consider whether a valid numerical measurement of association can be obtained.
  4. Find (by any method) the equation of a regression plane applicable to the following table, regarding each of the 15 entries as of equal importance.
    Compute the corresponding values from the equation and comment on the differences between the observed and computed numbers.
    What further information would be needed to calculate regression coefficients’?

    Age of wife at marriage

    		 Children born per 100 couples by age of husband
    15 – 25 25 – 35

    35 – 45

    15–20 years

    		 813 714 629
    20–25 661 595

    540

    25–30

    		 498 462 434
    30–35 364 341

    322

    35–40

    		 171 160

    150
  5. In a certain population the number of males over 25 years old is 875712, and the numbers who were 25, 26, 27, 28, 29 years last birthday respectively 29556, 29336, 29078, 28816, 28542. From these data, fill in the following, where the letters have the meanings usual in life tables:

    Age

    		 lx Lx dx qx

    mx

    24

    26

    27

    28
    29

If qx is the rate of mortality, mx the central death rate, and \mu_{x} the force of mortality, show that q_{x}= \frac{2m_{x}}{2+m_{x}} and approximately \mu_{x}= m_{x-\frac{1}{2}}.

  1. What data are necessary for measuring how far a low birth-rate is compensated by low infant and child mortality? Show in some detail the form of statistical results obtainable.

 

Thursday, June 2, 1921. 1.30–4.30.
ECONOMIC CONDITIONS IN ENGLAND 1823-1828,
AND CONTEMPORARY SOCIAL THOUGHT.

  1. Give an account of Place’s efforts to defeat the reactionary intentions of the Government in 1825 with regard to the Combination Act of 1824.
    How far is he justified in his statement that “Ultimately the Act (of 1825) differed very little from Mr Hume’s Act. It is substantially the same”?
  2. On what grounds did Huskisson advocate
    (a) the retention of the “long haul” clause in the Navigation Act,
    (b) imperial preference?
    Was the U.S.A. justified in regarding the latter as a continuance of the old tariff discriminations?
  3. “The question, then, looking at it practically, is this: In what degree is Prohibition better, as against smuggling, than a well-regulated duty?—by which I mean, a duty sufficient to protect the British manufacturer, without being so high as to afford a premium to the smuggler.” (Huskisson: Speech on the Silk Manufacture, Feb. 1826.)
    Show how this consideration guided Huskisson in the changes which he made in the customs tariff.
  4. What were the leading ideas in the programme of the early London Cooperators, and from what source or sources were they derived?
  5. Why were the problems of the Irish Poor and the English Hand-loom Weavers treated by the Emigration Committees of 1826 and 1827 as a single problem?
  6. Show how the fear of a redundant population dominated the recommendations of the Emigration Committees of 1826 and 1827.
  7. “In Lancashire there appear to be among the Hand-loom Weavers two classes almost wholly distinct from each other; the one who, though they take in work in their own homes or cottages, are congregated in the large manufacturing towns; and the other, scattered in small hamlets or single houses in various directions throughout the manufacturing country.” (Emigration Committee, 1827.)
    Was this distinction of long standing? Was it peculiar to Lancashire?
  8. Illustrate from the Rural Rides Cobbett’s first-hand acquaintance with agricultural conditions.
  9. “The Ricardian Socialists, though fairly unanimous in their criticisms of the existing system, differed greatly as to remedies.”
    Illustrate this from the writings of William Thompson, Thomas Hodgskin and J. F. Bray.
  10. If you were engaged in an investigation into social conditions in England (1823-8), which are the trades about which you would find it most difficult to obtain information, and why?

 

Thursday, June 2, 1921. 1.30–4.30.
INTERNATIONAL LAW.

  1. Describe the system of Colonial Mandates in the Covenant of the League of Nations. Indicate what are the important changes introduced and, in particular, consider the question of the sovereignty over the mandated areas.
  2. How far do you consider that the principle of “Self- Determination” has a basis in International Law?
    Comment on the following statement of Mr Lansing: “It is an evil thing to permit the principle (i.e. of Self-Determination) to continue to have the apparent sanction of the nations when it has been thoroughly discredited.”
  3. Compare the position in International Law of the Suez and Panama Canals.
  4. Examine the following statement of Lord Stowell: “In my opinion there exists a general rule in the maritime jurisprudence of this country by which all trading with the public enemy, unless with the permission of the sovereign, is interdicted. It is not a principle peculiar to the maritime law of this country.”
    On what grounds is such a principle to be justified?
  5. Comment on one of the following passages:
    (a) “II y a donc, voulue par la conscience universelle, une certaine limitation aux moyens d’hostilités, limitation encore bien imparfaite et qu’il est ambitieux de décorer du nom pompeux de lois de la guerre. Disons, plus modestement, qu’il existe des usages de la guerre dont le droit international demeure le guide moral et l’inspirateur.”
    (b) “Gegenüber der rechtmässigen Ausübung des Anhaltungs-, Durchsuchungs- und Wegnahmerechts gibt es für das Kauffahrteischiff kein Recht der Notwehr. Die Notwehr ist begrifflich die Verteidigung gegenüber einem rechtswidrigen Eingriff in ein Rechtsgut. Dies gilt allgemein für die neutralen wie für die feindlichen Kauffahrteischiffe. Die letzteren nehmen keine Ausnahmestellung ein. Auch sie besitzen kein Recht der Notwehr.”
  6. To what treatment are merchant ships belonging to the citizens of a belligerent state which are in the ports of the other belligerent at the outbreak of war subjected by International Law?
    What course was taken by Great Britain, with regard to German and Austrian ships in British ports at the outbreak of the war in 1914?
  7. Discuss the origin and development of the doctrine of “Continuous Voyage.”
  8. Do you consider that any violation of neutrality has been committed in any of the following cases?
    (a) The export of munitions by neutral manufacturers to one of two belligerents.
    (b) The granting permission by a neutral state for the passage through its territory of the sick and wounded of a belligerent’s army.
    (c) The granting of permission by a neutral state to belligerent warships to effect repairs in its ports.
  9. Discuss the propriety of the use of the term “Blockade” in relation to the measures taken by Great Britain under the Order in Council of 11 March 1915.
  10. What is the effect of lapse of time upon the binding force of a treaty?
    Discuss the action of Austria in annexing Bosnia and Herzegovina in 1908.

 

Friday, June 3, 1921. 9–12.
POLITICAL SCIENCE.

  1. “By Liberty I mean the assurance that every man shall be protected in what he believes his duty, against the influence of authority and majority, custom and opinion.” (Acton.)
    Use this opinion to show how you define Liberty.
  2. How has the argument regarding the rights of property been affected by the development of modern industrial conditions?
  3. State and examine Rousseau’s distinction between the General Will and the Will of All.
  4. Discuss Mill’s view of the conditions essential to the success of representative government.
  5. What are the conditions or grounds of objection which give a minority the strongest right to refuse obedience?
  6. On what principle should the relations between a first and a second chamber be regulated in a modern democracy?
  7. Give a critical estimate of the position which has developed between the State and Labour, through the Social Reform movement of the last generation in England.
  8. Explain the alternative implied in Weltmacht oder Niedergang. What reactions on the life of the great State have been attributed to the development of colonial possessions?
  9. What are the main considerations which determine a sound theory of punishment?
  10. “The separation of powers in politics corresponds to the fixity of species in natural science; and both ignore evolution.”
    Comment on this statement.

Source: Cambridge University Economics Tripos Papers, 1921-1926. With the papers set in the Qualifying examinations 1925 & 1926. Cambridge at the university press 1927, pp. 1-21.

Image Source: Kings College, Cambridge England. Library of Congress Prints and Photographs Division, Washington, D.C. 20540.

Categories
Exam Questions M.I.T. Problem Sets Syllabus Undergraduate

M.I.T. Principles of Microeconomics, course materials. 1994-2005

 

Today’s post takes Economics in the Rear-view Mirror on a short journey to the very recent past.  Instead of transcribing archival material and publications from the period 1870-1970, I thought I would see what trawling the 341 billion web pages in the internet archive, Wayback Machine, might yield us.

On Christmas eve of 1996 Wayback Machine first captured webpages for the principles of microeconomics course taught to undergraduates at M.I.T. (14.01). Below you will find links to the archived lecture plans, problem sets and questions/answers for midterm and final examinations that I have been able to find. Spoiler alert: there are gaps in this archival record, but still one finds plenty of useful items, now more conveniently ordered. 

But first I share a few paragraphs from my paper “Syllabi and Examinations” that suggest the method in my madness. 

 

_________________

On the virtual informational frontier in the history of economics

…historians of recent economics are facing information-engineering challenges of learning to harness the power from the enormous current of weblog postings, tweets, working papers, media transcripts and exploding data bases to study the processes of scientific innovation and diffusion.  The pedagogy of walk-talk-and-chalk has almost become relegated to the stuff of legend, and successive waves of duplication technologies have been forced to yield to the “pdf-ing” of lecture notes, syllabi, spreadsheets, and problem sets. Video and audio recordings of lectures, panel discussions, and interviews also contribute to a genuine curse of dimensionality confronting historians of contemporary economics.

Now we can imagine a virtual divide in our informational past that marks a frontier between the methodological problems associated with the relative scarcity of written artifacts relevant for the study of the earlier evolution of the education and training of economists and the current problems of judiciously sampling from an ever expanding big data universe.  But whether as historians we are working one side of this frontier or the other, it makes great sense to embed our specific empirical concerns within a common framework, assuming a great arc of continuity (nobody said smooth!) that connects 1918 with, say, 2018 with respect to the scope and methods of economics. Without a common framework, our respective narratives would resemble tunnel building from opposite sides of a mountain with the most likely result being two noncommunicating parallel tunnels in the end. Does anyone really think there is a parallel Harvard, Chicago, Columbia, Wisconsin, Michigan universe? Of course not, we really did get here from there.

 

Source:  Irwin L. Collier. Syllabi and Examinations in History of Political Economy, Vol. 50, No. 3 (September 2018), pp. 587-595.

_________________

MIT 14.01
PRINCIPLES OF MICROCONOMICS

Spring 1994
Professor Jeffrey Harris

Final Exam and Alternate Final Exam (questions)

Fall 1994
Professor Franklin Fisher

Midterm Exam 1 (questions and answers)

Final Exam & Alternate Final Exam (questions)

Spring 1995
Professor Jeffrey Harris

Problem Sets with Solutions

Midterm Exam 1 (questions and answers)

Midterm Exam 2 (questions and answers)

Final and Conflict Final Exams (questions)

Fall 1995
Professor Franklin Fisher

Problem Sets with Solutions

Midterm Exam 1 (questions and answers)

Final and Alternate Final Exams (questions)

Spring 1996
Professor Jeffrey Harris

Problem Sets with Solutions

Midterm Exam 1 (questions and answers)

Midterm Exam 2 (questions and answers)

Final and Conflict Exam (questions)

Fall 1996
Professor Jeffrey Harris

Textbook:  Earl L. Grinols, Microeconomics (Boston: Houghton-Mifflin, 1994). “The textbook differs from that assigned in recent past semesters.”

Course home page

Syllabus

Additional Course Information

Schedule

Problem sets and Solutions

Midterm 1 (with answers)

Midterm 2 (questions and answers)

Midterm 2, alternate (questions and answers)

Final and Conflict Exams (questions)

Spring 1997

No Wayback Machine captures found…yet!

Fall 1997
Professor Jeffrey Harris

Probable Textbook: Earl L. Grinols, Microeconomics (Boston: Houghton-Mifflin, 1994).

Course home page

[For some reason all the links go back to Fall 1996]

Spring 1998

No Wayback Machine captures found…yet!

Fall 1998
Professor Jeffrey Harris

Textbook: Earl L. Grinols, Microeconomics (Boston: Houghton-Mifflin, 1994).

Course home page

Syllabus

Schedule

Spring 1999
Professor Jonathan Gruber

Textbook: Jeffrey M. Perloff, Microeconomics (Addison Wesley Longman, 1999).

Course home page

Syllabus

Fall 1999
Professor Jeffrey Harris

Textbook: Jeffrey M. Perloff, Microeconomics (Addison Wesley Longman, 1999).

Syllabus

Spring 2000
Professor Jonathan Gruber

Textbook: Jeffrey M. Perloff, Microeconomics (Addison Wesley Longman, 1999).

Syllabus

Schedule

Fall 2000
Professor Jonathan Gruber

Textbook: Perloff, Jeffrey M. Microeconomics. 1st Edition. Addison-Wesley.

Course home page

Syllabus

Schedule

Spring 2001
Professor Christopher Snyder

Textbook: Pindyck and Rubinfeld, Microeconomics, 5th ed.

Course home page

Syllabus

Schedule

Fall 2001
Professor Jeffrey Harris

Textbook: Pindyck & Rubinfeld, Microeconomics, 5th Edition (Prentice Hall, 2001).

Course home page

Syllabus

Schedule

Midterm 1 with answers

Spring 2002
Professor Paul Joskow

Textbook: Pindyck & Rubinfeld, Microeconomics, 5th Edition (Prentice Hall, 2001).

Course home page

Syllabus

Schedule

Fall 2002
Professor Jonathan Gruber

Textbook: Jeff Perloff, Microeconomics, 2nd Edition (Addison Wesley Longman, 2001).

Course home page

Syllabus

Schedule

Midterm 1 with answers

Spring 2003
Professor Paul Joskow

Textbook: Pindyck and Rubinfeld, Microeconomics, 5th Edition.

Course home page

Syllabus

Schedule

Fall 2003
Professor Jonathan Gruber

Textbook: Jeffrey M. Perloff, Microeconomics, 3rd Edition.

Course home page

Syllabus

Schedule

Midterm 1 (Solutions)

Midterm 2 (Solutions)

Spring 2004
Professor Paul Joskow

Textbook: Pindyck and Rubinfeld, Microeconomics, 5th Edition.

Course home page

Syllabus

Schedule

Fall 2004
Professor Jonathan Gruber

Textbook: Jeffrey M. Perloff , Microeconomics, 3rd Edition.

Course home page

Syllabus

Midterm 1 (questions)

Spring 2005
Professor Jeffrey Harris

Textbook: Microeconomics, Robert S. Pindyck, Daniel L. Rubinfield, Prentice Hall, June 30, 2004 (6th edition).

Course home page and syllabus

Schedule

 

Image:  Mr. Peabody (dog) and Sherman (boy) activating the original WABAC Machine.

Categories
Exam Questions Harvard Leontief Undergraduate

Harvard. Undergraduate mathematical economics. Schumpeter, Leontief, Goodwin. 1933-1950

 

 

Joseph Schumpeter introduced a one semester undergraduate course “Introduction to the Mathematical Treatment of Economic Theory” in the first semester of the 1933-34 academic year at Harvard. Schumpeter taught the course three times and it was taught from 1935-36 through 1947-48 by Wassily Leontief. The course was then continued by Richard Goodwin in 1949-50. This post presents a grab-bag of information that includes early and a late course description, annual enrollment data, a course outline from 1945-46 and five exams. Links to all earlier posts for the course available at Economics in the Rear-view Mirror have been included as well.

Some of the backstory to this course is included in this earlier post (memo by Crum of 4 April 1933 and a list of topics to be covered).

_______________

Course Announcement, 1933-34

Economics 8a 1hf. Introduction to the Mathematical Treatment of Economic Theory

Half-course (first half-year). Mon., 4 to 6, and a third hour at the pleasure of the instructor. Professor Schumpeter, and other members of the Department.

Economics 8a is open to those who have passed Economics A, and Mathematics A, or its equivalent. The aim of this course is to acquaint such students as may wish it with the elements of the mathematical technique necessary to understand the simpler contributions to the mathematical theory of economics.

Source:  Announcement of the Courses of Instruction offered by the Faculty of Arts and Sciences 1933-34 (Second edition) in Official Register of Harvard University, Vol. XXX, No. 39 (September 20, 1933), p. 126.

*  *  *  *  *  *  *

Course Enrollment, 1933-34

[Economics] 8a 1hf. Professor Schumpeter. — Introduction to the Mathematical Treatment of Economic Theory.

15 Graduates, 3 Seniors, 5 Others. Total 23.

Source: Harvard University. Report of the President of Harvard College and Reports of Departments for 1933-1934, p. 85.

*  *  *  *  *  *  *

Exam not found for Economics 8a, 1933-34

_______________

Course Enrollment, 1934-35

[Economics] 8a 1hf. Professor Schumpeter. — Introduction to the Mathematical Treatment of Economic Theory.

2 Seniors, 1 Junior, 1 Sophomore. Total 4.

Source: Harvard University. Report of the President of Harvard College and Reports of Departments for 1934-1935, p. 81.

*  *  *  *  *  *  *

 1935 final exam questions.

_______________

Course Enrollment, 1935-36

[Economics] 8a 2hf. Asst. Professor Leontief. — Introduction to the Mathematical Treatment of Economic Theory.

4 Juniors, 2 Sophomores. Total 6.

Source: Harvard University. Report of the President of Harvard College and Reports of Departments for 1935-1936, p. 82.

*  *  *  *  *  *  *

Implicit course outline and course readings with the 1936 exam questions.

_______________

Course Enrollment, 1936-37

[Economics] 4a 2hf. Asst. Professor Leontief. — Introduction to the Mathematical Treatment of Economic Theory.

1 Graduate, 2 Seniors, 3 Juniors, 2 Sophomores, 1 Other. Total 9.

Source: Harvard University. Report of the President of Harvard College and Reports of Departments for 1936-1937, p. 92.

*  *  *  *  *  *  *

Final Examination, 1936-37
HARVARD UNIVERSITY
ECONOMICS 4a

Answer at least THREE questions: one in each group

Group I

  1. Discuss the relation between the production function of an enterprise and its cost curve.

 

Group II

  1. Given a cost of a single plant:
    C=\frac{1}{A+X}+BX
    where C indicates the total cost, X the total output, and the magnitudes of the two constants are such
    that A< 0 and B> 1/A.
    Derive the total cost curve of an enterprise which consists of two identical plants of this kind.
  2. A monopolist sells in two markets a commodity produced without costs. The total revenue, R1, obtained from the sale of q1 units of this commodity in the first market is given by:
    {{R}_{1}}=A{{q}_{1}}+Bq_{1}^{2}\text{ }\left( A>0,\text{ }B<\text{ }0 \right)
    The sale of q2 units in the second market nets:
    {{R}_{2}}=K{{q}_{2}}+Lq_{2}^{2}\text{ }\left( K>0,\text{ }L<\text{ }0 \right)
    Compute the prices which this monopolist would charge (a) with discrimination between the two markets; (b) without discrimination.

 

Group III

  1. Prove that marginal costs are increasing in the point of minimum average costs.
  2. Prove that a tax on profits cannot affect the output of an enterprise unless it induces it to suspend its operations.

 

Source: Harvard University Archives. Examination Papers. Finals 1937. (HUC 7000.28) Vol. 79. Faculty of Arts and Sciences. Papers Printed for Final Examinations. History, History of Religions, …, Economics, …, Military Science, Naval Science. January-June, 1937.

_______________

Course Enrollment, 1937-38

[Economics] 4a 2hf. Asst. Professor Leontief. — Introduction to the Mathematical Treatment of Economic Theory.

2 Graduates, 2 Seniors, 6 Juniors, 1 Sophomore. Total 11.

Source: Harvard University. Report of the President of Harvard College and Reports of Departments for 1937-1938, p. 85.

*  *  *  *  *  *  *

Final Examination, 1937-38
HARVARD UNIVERSITY
ECONOMICS 4a2

Answer THREE questions including question 1. Devote to discussion of question 1 about one hour and a half.

  1. Discuss fully the relation between the production function and the cost curve of an enterprise.
  2. Given:
    1. The cost curve of a monopolist:
      C= A+ BQ+ CQ2
      C indicates the total cost, Q the total output, A, B, C,are given constants.
    2. The demand function for his product in Market I.
      q1= a1– b1p1
      q1 is the quantity consumed for his product in Market I at the price p1.
      a1and b1 are given constants
    3. The demand function for his product in Market II.
      q2= a2– b2p2
      q2is the quantity taken in at the price p2;
      a2 and b2 are given constants.
      The monopolist is able to discriminate between the two markets provided the difference between the two prices is not larger than K
      Find (and express in terms of the given constants) that the value of Kwhich would maximize the sales q1 in the first market.
  3. Given:
    1. A, monopolist’s cost curve:
      C = A+ BQ+ CQ
    2. The demand curve for his product:
      p= a – bQ
      C stands for total costs, Q for total output, p for the market price, A, B, C, d, and b are constants.
      A subsidy at S dollars is paid to the monopolist per unit of output.
      Find how large the subsidy S must be in order to induce him to produce and sell twice as much as he would without the subsidy.
  4. Is it possible that the average costs of an enterprise are increasing with the output while the marginal costs are decreasing at the same time?
    Give and answer and demonstrate that it is correct.

 

Source: Harvard University Archives. Harvard University Final Examinations, 1853-2001. (HUC 7000.28) Box 4. Faculty of Arts and Sciences. Papers Printed for Final Examinations. History, History of Religions, …, Economics, …, Military Science, Naval Science. January-June, 1938.

_______________

Course Enrollment, 1938-39

[Economics] 4a 2hf. Asst. Professor Leontief. — Introduction to the Mathematical Treatment of Economic Theory.

2 Graduates, 2 Seniors, 2 Juniors, 1 Sophomore. Total 7.

Source: Harvard University. Report of the President of Harvard College and Reports of Departments for 1938-1939, pp. 97-98.

*  *  *  *  *  *  *

Exam not found for Economics 4a, 1938-39

_______________

Course Enrollment, 1939-40

[Economics] 4a 2hf. Associate Professor Leontief. — Introduction to the Mathematical Treatment of Economic Theory.

1 Graduate, 1 Sophomore. Total 5.

Source: Harvard University. Report of the President of Harvard College and Reports of Departments for 1939-1940, p. 98.

*  *  *  *  *  *  *

Final Examination, 1939-40
HARVARD UNIVERSITY
ECONOMICS 4a2

Answer four questions including question 1.

  1. Discuss the relation between the marginal costs of an enterprise and the marginal productivities of the factors used in production.
  2. An enterprise manufactures two commodities X and Y, using two factors of production, V and W. The production function is x(yb– 1) = vnwm.
    Given the prices px, py, pvand pwwrite down the equations which determine the most profitable outputs of X and Y and the corresponding inputs of V and W.
  3. Given:
    1. The total cost curve of a monopolist
      C = A + Kx2 and
    2. the market demand curve for his product
      p = B – Lx,
      p is the price and x the quantity of the commodity produced and sold. A, K, B and L are positive constants.
      An excise tax of z dollars per unit of output is being levied.
      What magnitude of z (expressed in terms of the given constants) would maximize the total tax receipts?
  4. Prove that the price of labor will exceed its marginal value productivity if
    1. labor is the only factor of production used in manufacture of a given commodity,
    2. the producer of this commodity sells his output on a purely competitive market, but is the only (“monopsonistic”) buyer of the particular kind of labor used in his plant,
    3. The supply curve of labor is negatively inclined.
  5. Discuss the problem of price discrimination by a monopolist.

 

Source: Harvard University Archives. Harvard University Final Examinations, 1853-2001. (HUC 7000.28) Box 5. Faculty of Arts and Sciences. Papers Printed for Final Examinations. History, History of Religions, …, Economics, …, Military Science, Naval Science. June, 1940.

_______________

Economics 4a not offered in 1940-41

_______________

Course Enrollment, 1941-42

[Economics] 4a 2hf. Associate Professor Leontief. — Introduction to the Mathematical Treatment of Economic Theory.

1 Graduate, 5 Seniors, 8 Juniors, 3 Sophomores, 1 Freshman. Total 18.

Source: Harvard University. Report of the President of Harvard College and Reports of Departments for 1941-1942, p. 62.

*  *  *  *  *  *  *

Course Outline Economics 4a 1941-42 (and 1942-43)

https://www.irwincollier.com/harvard-intro-to-mathematical-economics-schumpeter-leontief-1935-42/

*  *  *  *  *  *  *

Final Examination, 1941-42
HARVARD UNIVERSITY
ECONOMICS 4a

Answer one question in each of the following three groups:

(a) 1 or 2
(b) 3 or 4
(c) 5 or 6

  1. Describe in detail the relation between a production function and the corresponding cost function.
  2. Show that the slope of a supply curve of a single enterprise is positive.
  3. Show that a total cost curve can be of such a shape that the marginal costs are increasing but the average costs decreasing throughout its whole length. Give example.
  4. The cost curve of an enterprise is
    C = A + x + Bx2+ Kx3
    (C are the total costs, x – the output, A, B, and K – constants).
    What is the lowest competitive price at which the owner will find it profitable to operate the plant rather than to cease production entirely?
  5. An enterprise consists of two identical plants. Each has a following cost curve:
    C = A + Bx2+ x3
    (C are the total costs, x – the output, A and B are constants).
    Compute the combined cost curve of the whole enterprise.
  6. Given a production function y = f(x,z)
    (y is the amount of product, py – its price, x and z inputs of two factors, px and pz – their respective prices.)
    The producer maximizes his profits under conditions of pure competition. Show that an increase of the price px of factor x will reduce the amount (x) of this factor used in the process of production.

 

Source: Harvard University Archives. Harvard University Final Examinations, 1853-2001. (HUC 7000.28) Box 6. Faculty of Arts and Sciences. Papers Printed for Final Examinations. History, History of Religions, …, Economics, …, Military Science, Naval Science. June, 1942.

_______________

Course Description, 1942-43

Economics 4a 1hf. Introduction to the Mathematical Treatment of Economic Theory. Half-course (first half-year). Mon., 4 to 6. Associate Professor Leontief.

Economics A and Mathematics A, or their equivalents, are prerequisites for this course.
The course is intended to instruct beginners in economic theory (having had elementary mathematical training) in the application of elementary mathematical methods in economics and at the same time to enable them to understand some of the major contributions to economic theory made by such writers as Marshall, Cournot, Walras, and Edgeworth.

Source:  Official Register of Harvard University, Vol. XXXIX, No. 45 (June 30, 1942). Division of History, Government, and Economics Containing an Announcement for 1942-43. 

*  *  *  *  *  *  *

Course Enrollment, 1942-43

[Economics] 4a 1hf. Associate Professor Leontief. — Introduction to the Mathematical Treatment of Economic Theory.

1 Graduate, 2 Seniors, 4 Juniors, 2 Sophomores, 1 Public Administration. Total 10.

Source: Harvard University. Report of the President of Harvard College and Reports of Departments for 1942-1943, p. 46.

*  *  *  *  *  *  *

Exam not found for Economics 4a, 1942-43

_______________

Course Enrollment, 1943-44

[Economics] 4a. (winter term) Associate Professor Leontief. — Introduction to the Mathematical Treatment of Economic Theory.

2 Juniors in ROTC, 1 Radcliffe, 3 Seniors, 4 Navy (V-12). Total 10.

Source: Harvard University. Report of the President of Harvard College and Reports of Departments for 1943-1944, p. 56.

*  *  *  *  *  *  *

Exam not found for Economics 4a, 1943-44

_______________

Economics 4a not offered in 1944-45

_______________

Course Enrollment, 1945-46

[Economics] 4a. (fall term) Associate Professor Leontief. — Introduction to the Mathematical Treatment of Economic Theory.

1 Senior, 2 Juniors, 3 Sophomores, 2 Radcliffe. Total 8.

Source: Harvard University. Report of the President of Harvard College and Reports of Departments for 1945-1946, p. 58.

*  *  *  *  *  *  *

Course Outline, 1945-46

INTRODUCTION TO THE MATHEMATICAL TREATMENT OF ECONOMIC THEORY
Economics 4a
1945-46, Fall Term

  1. Introductory remarks.
    Profit function.
    Maximizing profits.
  2. Cost functions: Total costs, fixed costs, variable costs, average costs, marginal costs, increasing and decreasing marginal costs.
    Minimizing average total and average variable costs.
  3. Revenue function.
    Price and marginal revenue.
    Demand function
    Elasticity and flexibility.
  4. Maximizing the net revenue (profits).
    Monopolistic maximum.
    Competitive maximum.
    Supply function.
  5. Joint costs and accounting methods of cost imputation.
    Multiple plants.
    Price discrimination.
  6. Production function.
    Marginal productivity.
    Increasing and decreasing productivity.
    Homogeneous and non-homogeneous production functions.
  7. Maximizing net revenue, second method.
    Minimizing costs for a fixed output.
    Marginal costs and marginal productivity.
  8. Introduction into the theory of consumers’ behavior.
    Indifference curves and the utility function.
  9. Introduction to the theory of the market.
    Concept of market equilibrium.
    Duopoly, bilateral monopoly.
    Pure competition.
    Monopoly.
  10. Time lag and time sequences.
  11. Introduction into the theory of general equilibrium.

 

Reading: R. G. D. Allen, Mathematical Analysis for Economists.

Evans, Introduction into Mathematical Economics.

Antoine Cournot, Researches into the Mathematical Principles of the Theory of Wealth.

Jacob L. Mosak, General Equilibrium Theory in International Trade.

Weekly problems.

Source: Harvard University Archives. Syllabi, course outlines and reading lists in Economics, 1895-2003. HUC 8522.2.1, Box 3, Folders “1945-1946 (1 of 2)”.

*  *  *  *  *  *  *

Final Examination, 1945-46
1945-46
HARVARD UNIVERSITY
ECONOMICS 4a
Introduction to Mathematical Economics

Answer any three questions.

  1. Show the relationship between the total cost curve and the supply curve of an enterprise.
  2. Show that, at the point of optimum output, the marginal costs of an enterprise are equal to the price of any cost factor divided by its marginal productivity.
  3. A consumer has an income of q1 dollars in the first and of y2 dollars in the second year. Although the combined expenditures in the two years equal y1+ y2, he can spend more than y1 in the first year, and correspondingly less in the second year or vice versa. In both years, he purchases one kind of consumers’ goods, its price being p1 dollars in the first and p2 dollars per unit in the second year. The utility function which the consumer maximizes is u= f(x1, x2) where u is the utility level, x1 and x2 the quantities consumed in the first and second year respectively.
    1. Derive the equations which determine the optimum magnitudes of x1 and x2.
    2. Show that an increase of the price p1, with p2, y1,y2 remaining constant, might increase x1.
  4. The demand, q, for the product of a monopolist depends upon the price, p, of his produce and the amount of money, y, which he spends on advertising. The total production cost, c, depends upon the quantity of output, q. Given the demand function: q=\frac{A}{p}+{{y}^{{1}/{4}\;}}-p
    and the total (production) cost function c = q
    where A is a positive constant;
    Determine the output, the price, and the advertising outlay which would maximize the profits (total revenue minus total outlay) of this enterprise.
  5. The well-being, u, of a worker depends upon the amount, x, of consumers’ goods which he can buy with his daily wage, and the number of hours of leisure, y, which remain to him after he finishes his daily work:
    u= f(x, y)

    1. Derive the equations determining the number of hours (call it l) of daily work which he will be willing to do at the wage of w dollars per hour, if the price of the consumers’ good is p dollars per unit.
    2. Show that an increase of the hourly wage rate might reduce the number of hours which the worker will choose to work.

 

Source: Harvard University Archives. Harvard University Final Examinations, 1853-2001. (HUC 7000.28) Box 11. Faculty of Arts and Sciences. Papers Printed for Final Examinations. History, History of Religions, …, Economics, …, Military Science, Naval Science. January, 1946.

_______________

Economics 4a not offered in 1946-47

_______________

Course Enrollment, 1947-48

[Economics] 4a. Professor Leontief. — Introduction to the Mathematical Treatment of Economic Theory (Sp).

2 Graduates, 6 Seniors, 8 Juniors, 1 Sophomore, 2 Public Administration, 1 Radcliffe. Total 20.

Source: Harvard University. Report of the President of Harvard College and Reports of Departments for 1947-1948, p. 89.

*  *  *  *  *  *  *

Reading list and midterm and final examination question, 1947-48

_______________

Economics 4a not offered in 1948-49

_______________

Course Enrollment, 1949-50

[Economics] 104 (formerly Economics 4a). Assistant Professor Goodwin. — Introduction to the Mathematical Treatment of Economic Theory (Sp).

3 Graduates, 6 Seniors, 1 Junior, 2 Sophomores, 1 Public Administration, 1 Radcliffe. Total 14.

Source: Harvard University. Report of the President of Harvard College and Reports of Departments for 1949-1950, p.72.

*  *  *  *  *  *  *

Course Texts on Library Reserve, 1945-46

R.G.D. Allen. Mathematical analysis for economists

W.L. Crum. Rudimentary mathematics for economists and statisticians

P.A. Samuelson. Foundations of economic analysis.

Source: Harvard University Archives. Syllabi, course outlines and reading lists in Economics, 1895-2003. HUC 8522.2.1, Box 4, Folders “1949-1950 (1 of 3)”.

_______________

Image Sources: Schumpeter and Leontief from Harvard Class Album 1950, Goodwin from Harvard Class Album 1951.

Categories
Austria Economists Exam Questions Johns Hopkins Methodology

Johns Hopkins. Final exam for Fritz Machlup’s methodology course, 1956

 

 

Besides the questions for the final exam in Fritz Machlup’s course on the methodology of economics from the first semester of the 1955-56 academic year at Johns Hopkins University, I include the following photo from the 1956 yearbook Hullabaloo (p. 15) that identifies neither the speaker nor the seminar. While this is about as generic a seminar photo as one can imagine, I have something more than a mere suspicion that we are looking at Fritz Machlup in action. Perhaps some visitor with a keener forensic eye can confirm or reject my tentative identification in a comparison of the above portrait of Machlup reading himself with the speaker in the mystery seminar. The third man on the right, counting from the speaker, sure looks like a young Evsey Domar.

My hunch is based on the following picture of almost certainly the same seminar room in 1963 from the Carl Christ memorial website at Johns Hopkins.

 

______________

THE JOHNS HOPKINS UNIVERSITY
METHODOLOGY
18.601

Professor Fritz Machlup
January 27, 1956

Answer five questions, one from each group.
Write on loose sheets of paper; start a new sheet for each question.
Identify each sheet by the Question Number in the left corner and your Examination Number (which you draw before the examination) in the right corner; your name should appear nowhere.
You are on your honor not to use notes or to give or accept advice.

I.

  1. According to Poincaré, “a priori propositions are irrefutable because they are really firm resolutions to carry on the scientific game according to certain rules or stipulations.” Nevertheless, Morris Cohen considers a priori principles as “methodologic or regulative principles which enable us to organize our factual knowledge” and as “expressive of the fundamental nature of things,” What light does this view throw upon the methodological discussions of Hutchison, Kaufmann, Mises, and Knight?
  2. “While the deductive method might be applicable to a simple and stationary condition of industry, it becomes valueless in face of the increasing complexity of the modern economic world.” What was John Neville Keynes’ reaction to this point of view?
  3. “Just as the same proposition may express both a universal and a historical, or both a verbal and a real judgment, so it may express both a positive and a normative judgment.” (Fraser, Economic Thought and Language). First explain each of the three sets of antonyms and then explain and illustrate the statement.

II.

  1. Contrast and compare the logical nature of introspectionism and sensationalism as expounded by Felix Kaufmann or Morris Cohen.
  2. Give a reasoned explanation of Kaufmann’s distinction between three meanings of probability, one “relating to empirical knowledge as such”, another relating “to synthetic propositions undecided in a given scientific situation,” and a third referring to “the relative frequency of an attribute” within a certain collective.
  3. Felix Kaufmann, having made a distinction between empirical laws and theoretical laws, states: “Whereas we have both types of laws in natural science, there are, as I see it, no empirical laws established in social science, and even the tendency to establish such laws is not very strong. But if we consider the significance of theoretical laws in natural science, we cannot regard this as constituting a fundamental difference between the methods of natural science and those of social science.” Explain and discuss this statement in a way intelligible to someone who has not read Kaufmann’s writings.

III.

  1. Explain what Ludwig von Mises means by ”methodological apriorism”, “methodological individualism”, and “methodological singularism”.
  2. “In the history of applied Economics, the work of a Jevons, a Menger, a Bowley, has much more claim on our attention than the work of, say, a Schmoller, a Veblen, or a Hamilton.” What is Robbins driving at with this [last word cut off, “statement?” matches the spacing of the tips to the letter “t” that are still visible]
  3. Hutchison implies that pure theory may help the analyst to formulate questions to be answered by empirical studies: “The constant object of the scientist…is to compel the facts of experience to answer his questions definitely ‘yes’ or ‘no’…” Robbins appears to reverse the relationship: “Realistic studies may suggest the problem to be solved….But it is theory and theory alone which is capable of supplying the solution.” Discuss the paradox from the point of view of any of the other writers on methodology.

IV.

  1. If the description or institutional part of economics is viewed by Professor Knight as lying in the domain of cultural anthropology rather than economics proper, does this mean that in institutional inquiries sense observation assumes greater emphasis than intercommunication and interpretation? If not, why does Knight distinguish institutional from theoretical economics?
  2. “There are no better terms available to describe the difference between the approach of the natural and the social sciences than to call the former objective and the latter subjective.” (Hayek, “Scientism and the Study of Society”.) Explain the meaning of the essential terms employed and the statement as a whole.
  3. Hayek said: “It is only in so far as some sort of order arises as a result of individual action but without being designed by any individual that a problem is raised which demands a theoretical explanation.” Explain.

V.

  1. “Economics is in fact the only science which enjoys the advantage of an automatic quantification of its subject matter.” (Parsons, “Sociological Elements in Economic Thought”). Explain and discuss.
  2. Parsons distinguishes the following ideal types of criticism of abstract economic theory: (1) supplementary positivistic empiricism: (2) radical positivistic empiricism; (3) romantic empiricism; (4) supplementary non-economic sociology. Characterize each in a brief statement illustrated by examples.
  3. Discuss Veblen’s principal categories of human action—especially the “pragmatic” versus the “workmanlike” type—and compare them with the general “rational” type and the narrower “economic” type used in the abstract theories of traditional economics.
  4. On what grounds do Professors Herskovits and Knight reject and defend, respectively, the concept of the “economic man” as a useful tool of economic analysis?

 

Source:  Johns Hopkins University. The Ferdinand Hamburger, Jr. Archives. Department of Political Economy, Series 6. Box 3/1. Folder: “Department of Political Economy, Graduate Exams, 1933-1965”.

Image Source:  Johns Hopkins University yearbook, Hullabaloo, 1957, p. 28.

Categories
Exam Questions M.I.T.

M.I.T. Midterm and Final exams. Income and Employment Theory. Domar, 1968-69

 

Previously posted are the outlines, readings, and exams for Domar’s national income and employment courses taught at the University of Chicago in 1948 and at M.I.T. in 1965. Also of interest here are the MIT student evaluations for this and other core theory courses in the late 1960s.

There is little doubt in my mind that MIT economics graduate students during the first term of the 1968-69 academic year responded to Evsey Domar’s attempts to get them interested in the details of national income and product accounting and productivity indexes with an enthusiasm to rival the high-school kids’ reaction to the Hawley-Smoot lesson attempted by a high-school teacher in the cult-film Ferris Bueller’s Day Off.

Fun-fact: the boring teacher in the movie was played by Ben Stein, son of economist, Herbert Stein. One more piece of fun: watch an older Ben Stein talk about getting that role.

In Domar’s defense, national accounting and index numbers have never been the stuff of a great TED talk. Anyone? … Anyone?

__________________

THE THEORY OF INCOME AND EMPLOYMENT
14.451
E. D. Domar

MIDTERM EXAMINATION
November 27, 1968

Seventy-five minutes

Please answer all questions. Note their weights. Use a separate book for each question.

  1. [30%] “One of the basic defects of the American economic system lies in the presence of a large number of persons who receive legal incomes and yet perform no useful services. The inclusion of their incomes in the national income total (according to accepted methods) undoubtedly exaggerates this total.”
    Discuss this statement carefully. Distinguish different kinds of income and different sources. In each case indicate how national income (or product) will be affected if these persons were employed productively. (What does “productively” mean in this context?)
  2. [30%] In national income comparisons between the Soviet Union and the U.S. (or other pairs of less developed and advanced countries) it is usually thought that existing methods of social accounting understate the ratio of Russian to American income, particularly if official rates of exchange are used for conversion.
    1. Evaluate this statement critically and indicate whether or not you agree with it and why.
    2. Suppose the comparison was made first in Russian prices (for both countries) and then in American prices (again for both countries). Which one should give the Russians a more favorable ratio and why? (Hint: consider comparisons over time in the same country.)Note: Disregard the complexities of the Russian price system: remember that the Russian ruble is not freely convertible into other currencies.
  3. [25%] a. What role or roles does the so-called “Money Illusion” play in the Classical and Keynesian systems?

b. If a country is suffering from inflation, will an increase in output brought about by the reduction in unemployment (assuming that it existed) intensify or reduce the inflation? Why? (Hint: this is not an easy question; consider carefully the nature of output to be produced.)

  1. [15%] If you wanted to measure labor or other factor productivity would you or would you not use the Federal Reserve Index of Industrial Production? Why or why not?

 

Source: Duke University. David M. Rubenstein Rare Book and Manuscript Library. Economists’ Papers Archives. Evsey D. Domar Papers. Box 17, Folder “Macroeconomics Examinations (1 of 3)”.

__________________

THE THEORY OF INCOME AND EMPLOYMENT
14.451
E. D. Domar

FINAL EXAMINATION
Jan. 28, 1969

Three hours

Please answer Question 1 and any FOUR out of the five remaining questions. Use a separate book for each question.

  1. [24%] An overheard argument among students in 14.451 about measures required to increase investment:

Student A: Increase the quantity of money in order to reduce the rate of interest.

Student B: No, an increase in the quantity of money will merely raise prices.

Student C: A fall in the rate of interest will not have any appreciable effect on investment in any case.

Student D: A fall in the rate of interest will reduce savings, and thus reduce rather than increase investment.

Student E: To increase investment we should increase savings by increasing income inequality.

Student F: On the contrary, greater income equality will increase savings.

Student G: You are both (That is, E and F) wrong: the fraction of income saved is independent of income distribution and of the size of a person’s income.

Student H: To increase investment we should increase demand by increasing consumption and thus reducing saving.

Student I: Nothing will help unless you reduce the prices of machinery and construction.

Student J: You (that is, Student I) are wrong: your suggestion will merely reduce the amount of investment.

Please set this poor, confused group straight (if you can). In so doing, explain clearly the assumptions and conditions implied in each statement and evaluate it critically. Try to identify the opera (and its author) from which each aria is taken. How would you go about increasing investment?

  1. [19%] “Thus the rate of interest is what it is because it is expected to become other than it is; if it is not expected to become other than it is, there is nothing left to tell us what it is…”
    1. Can you identify the author of this famous statement?
    2. Can you recognize whose interest theory he referred to?
    3. Explain and evaluate that theory critically.
    4. Present your own (original or otherwise) theory of interest.
  2. [19%] a. Assume that all expenditures on education and training, both private and public, are to be treated as investment. Explain the modifications that you would make in existing methods of national income, (and product) and wealth accounting and the reasons for these changes.

b. In computing national product, each commodity (or service) is multiplied by its price in order to compute the total. What is the rationale for this method? What assumptions is it based on? Are these assumptions realistic?

  1. [19%] Suppose Project I has a higher internal rate of return, while Project II has a larger discounted value. Assume that the projects are mutually exclusive, and that both are being considered by a private firm.
    1. Explain the rationale of each method and the assumptions it is based on.
    2. Which method (that is, the internal rate vs. present value) would you use under what conditions and why?
    3. How will your calculations be changed if the projects are undertaken by a government of some underdeveloped country?
  2. [19%] a. “A high ratio of depreciation to investment is a sign of old age.”

b. “If the measured distribution of income remained the same in the U.S. over the last fifty years, the distribution of permanent income has become less equal.”
Comment. Explain your conclusion thoroughly.
c. “If the Balanced-Budget Theorem is correct, is Say’s Law also correct?”
Comment. Explain what is meant by each part of this statement.

  1. [19%] a. “What is the proper definition of money required in the Price-Flexibility (Patinkin-like) problems? Why and how does it differ from the usual definition?
    Explain what elements of American money supply and of other relevant assets you would include or exclude in the proper (for this purpose) definition of money.

b. Explain how Patinkin’s conclusions regarding the effects of an increase (say, of doubling) in the quantity of money “by magic” on the price level and on the rate of interest are modified by the existence of the money illusion in the labor market.
c. Assume the absence of money illusion and explain why the effects of creating money by open market operations differ from those when money is created “by magic.”

 

Source:Duke University. David M. Rubenstein Rare Book and Manuscript Library. Economists’ Papers Archives. Evsey D. Domar Papers. Box 17, Folder “Macroeconomics Examinations (2 of 3)”.

Image Source: Evsey D. Domar at the MIT Museum.

Categories
Chicago Exam Questions

Chicago. Graduate Prelim Exam for International Trade, 1970

 

Determining authorship for a committee’s prelim exam is difficult. The fact that this copy of the exam was found in Lloyd Metzler’s papers is a sign that he likely had a hand in composing at least part of the exam. One can see an inconsistency in British/US spelling (labour vs. labor) that leads me to conclude that Harry Johnson was also likely a co-author.

___________________

INTERNATIONAL TRADE
Preliminary Examination for the Ph.D. and A.M. Degrees
Winter 1970

WRITE THE FOLLOWING INFORMATION ON YOUR EXAMINATION PAPER:

Your code number and NOT your name
Name of Examination
Date of Examination

(Write in Black Ink)

Results of the examination will be sent to you by letter.
Answer all questions. Time: 4 yours

  1. Answer question (a) or (b)
    1. Assume a Heckscher-Ohlin model economy in which one of the two products is the capital good, population is constant; and a certain fixed proportion of the existing capital stock wears out each year. The economy devotes a certain proportion of the value of its annual output to gross saving.
      1. Analyse the long-run equilibrium of the economy, in isolation from foreign trade.
      2. Analyse the effects of the opening of trade at fixed terms of trade on the economy’s long-run equilibrium.
      3. Comment on the implications of your analysis for the conflicting views that free trade is the best policy, and that tariffs promote economic development.
    2. Assume, in contrast to the Heckscher-Ohlin model, that while labour is mobile between the two industries capital is specific to its industry (and in the closed economy fixed in quantity in each industry).
      1. What can you conclude about the effects of the opening of free trade on factor prices, assuming factors immobile?
      2. How are these conclusions altered by the assumption that capital in one industry is internationally mobile but remains sector-specific (i.e. a certain stock of capital is confined to the automobile industry, but can locate in either “Canada” or “The United States”?
      3. What would be the effects of the imposition of a tariff on Canadian imports of automobiles, on the location of production and on factor prices?
  1. Answer question (a) or (b)
    1. Keynes argued that in a system of flexible exchange rates involving a forward market, the forward rate has a constitutional weakness of the demand side. Thus, he said that while there are many asset holders with foreign assets who would like to hedge by selling forward exchange, there are few holders of foreign liabilities who would like to hedge by purchasing forward exchange.
      1. Assuming that interest rates are the same at home as abroad, what does this imply with respect to the discount or premium of the forward rate, all rates being measured in terms of the domestic-currency price of the foreign currency?
      2. Discuss the validity of Keynes’ argument, first on the assumption that inter-market arbitrage exists, and second on the assumption that it does not.
    2. A given country produces two commodities, food and manufactures, with two factors, labour and land. Suppose that food is land-intensive in the sense that the optimal ratio between land and labour is higher than in manufactures for all factor price ratios. Suppose further, that the production functions for both commodities are homogeneous of the first degree so that increasing the inputs of labour and land by fifty per cent in any commodity, increases output, also by fifty per cent.
      1. Given fixed amounts of labour and land, prove that the product-substitution schedule has the characteristics of a diminishing returns schedule, despite the fact both food and manufactures are produced at constant cost.
      2. How do you account for this appearance of diminishing returns?
      3. Suppose that Country A has a larger land-labour ratio than Country B. Is it possible that A may nevertheless import food, the land-intensive commodity and export manufactures, the labor-intensive commodity? Indicate graphically how this may occur. Is this result inconsistent with the Heckscher-Ohlin theorem that international trade raises the prices of the low-cost factors and lowers the prices of the high-cost factors? Explain.
      4. Is it a possible explanation of the Leontief paradox, which shows that the United States exports labour-intensive commodities and imports capital-intensive commodities?
  1. Suppose the world is composed of two large blocs and a few other countries. Suppose that the two large blocs do not intervene in the exchange market. Analyze, in the context of the optimum currency area literature, the consideration which would persuade one of the outside countries to peg their currency to one rather than the other currency area.
  2. It has been shown by Mundell that if one factor is internationally mobile and a country imposes a tariff on imports, the result will be the termination of international trade. What happens if the country simultaneously imposes a tax on the earnings of the factor that moves?
  3. “The ‘Keynesian’ theory of devaluation developed by Joan Robinson, James Meade, A. C. Harberger, H. G. Johnson and others depends on the assumption of ‘money illusion’ on the part of the labour force. If that assumption is replaced by the assumption that wages in the long run are determined according to the theory of marginal productivity, a completely new theory of devaluation has to be developed.”
    Discuss this quotation, and if you agree with it sketch the nature of the new theory required.
  4. “The optimum tariff argument for protection is the only valid first-best economic argument for a tariff. All the other arguments are either second-best economic arguments, non-economic arguments, or non-arguments.”
    Discuss, giving examples. How would you describe the infant-industry argument?
  5. Discuss the main arguments for and against the following proposed solutions for the adjustment problem of the international monetary system:

(i) the “wider band”
(ii) the “crawling peg”
(iii) a rise in the price of gold

  1. Answer question (a) or (b)
    1. “The established version of the theory of effective protection is unsatisfactory because it attempts to combine a general equilibrium theory of demand with a partial-equilibrium theory of supply. If the usual Heckscher-Ohlin assumptions about production are made, the theory falls apart.”
      Discuss this quotation.
    2. or
      1. Discuss the controversy between Johnson and Metzler concerning the transfer problem under the conditions postulated by Keynes. (You need not indicate what you regard as the correct result but only what were the main points of the controversy.)
      2. What changes were made by Metzler in the orthodox or prevailing theory, generally but erroneously attributed to Ohlin? Show that these changes are in accord with Johnson’s “Suggestions for Simplifying Balance of Payments Theory.”

 

Source:Duke University. David M. Rubenstein Rare Book and Manuscript Library. Economists’ Papers Archive. Papers of Lloyd Appelton Metzler, Box 9, Folder “Exams 302”.

Image Source: Tariff reform–Cleveland and Thurman, ca. 1888  from Library of Congress Prints and Photographs Division Washington, D.C. 20540 USA