Category: Exam Questions

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Exam Questions Harvard Theory

Harvard. Graduate Economic Theory Exam. April 1962

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

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

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Other Harvard Written Exams
in Economic Theory

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

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

Written Examination
in Economic Theory
April 10, 1962

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

Part I (one hour)

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

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

Part II (three hours)

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

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

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

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Chicago Exam Questions Microeconomics

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

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

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

q = 100 – p.

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

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Chicago Price Theory
Preliminary/Core Exams
Previously Posted

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

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CORE EXAMINATION
ECONOMIC THEORY
Winter 1961

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

WRITE THE FOLLOWING INFORMATION ON YOUR EXAMINATION PAPER:

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

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

Answer all questions. Time 3 hours.

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

III. (40 minutes)

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

IV. (40 minutes)

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

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

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

Categories
Columbia Exam Questions Germany

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

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

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

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

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GERMAN LANGUAGE EXAM
February 1966

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

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

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

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

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

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

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

Categories
Exam Questions Money and Banking UCLA

UCLA. PhD Qualifying Exam, Money. May 1974

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

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

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UCLA Qualifying Exams, Money
Previously posted

May 1971
May 1973

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Spring Quarter 1974
May 24, 1974

Ph.D. Qualifying Examination
MONEY

Four Hours

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

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

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

Image Source: UCLA Daily Bruin at archive.org.

Categories
Chicago Exam Questions Microeconomics

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

 

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

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Chicago Price Theory
Preliminary/Core Exams
Previously Posted

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

____________________

CORE EXAMINATION
Price Theory
Winter 1963

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

WRITE THE FOLLOWING INFORMATION ON YOUR EXAMINATION PAPER:

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

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

Answer all questions.

Time 3 hours.

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

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

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

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

Categories
Exam Questions France Germany Harvard History of Economics

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

Friedrich Benedict von Hermann (ca. 1850)

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

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

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Previously offered

1903. Exam for German Economic Thought

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

________________________

Course Enrollment
1908-09

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

Total 9: 9 Graduates.

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

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Course Description

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

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

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

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

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ECONOMICS 22
Year-end Examination, 1908-09

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

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

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Cf. Original German Text

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

[two pages later]

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

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

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

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

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

Charles P. Kindleberger

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

_________________________

Previously transcribed and posted
General Exams
for International Economics

1959
February and May 1966

_________________________

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

1950-51
1954-55
1961-67

_________________________

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

GENERAL EXAMINATION IN INTERNATIONAL ECONOMICS

Three hours.

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

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

Part I

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

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

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

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

Part II

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

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

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

Categories
Chicago Exam Questions Microeconomics

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

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

____________________

Chicago Price Theory
Preliminary/Core Exams
Previously Posted

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

____________________

Note in pencil at top of page:

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

____________________

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

WRITE THE FOLLOWING INFORMATION ON YOUR EXAMINATION PAPER:

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

Results of the examination will be sent to you by letter after results on all preliminary examinations have been received.

Answer all questions. Time: Four hours.

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

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

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

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

Categories
Exam Questions Harvard Law and Economics

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

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

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From earlier years

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

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Course Teaching Assistants
1908-09

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

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

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

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

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

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Course Enrollment
1908-09

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

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

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

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Course Announcement
1908-09

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

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

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

Source: Official Register of Harvard University, Vol. V, No. 19
(1 June 1908). History and Political Science Comprising the Departments of History and Government, and Economics, 1908-09, p. 57.

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ECONOMICS 21
Mid-year Examination, 1908-09

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

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

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

Categories
Exam Questions Johns Hopkins Macroeconomics Undergraduate

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

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

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

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Course Announcement
1955-56

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

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

Prerequisite: Political Economy 1.

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

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E. D. Domar
November 2, 1955

THE JOHNS HOPKINS UNIVERSITY

NATIONAL INCOME AND EMPLOYMENT
(Political Economy 3)

[FIRST] HOUR EXAMINATION
Fall Term, 1955-56

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

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

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

Capital consumption allowances (depreciation)

14
Compensation of employees (wages & salaries)

90
Corporate income taxes

10
Dividends (received by consumers)

8
Employer (business) contribution to social insurance

3
Government purchases of goods and services

38
Government transfer payments

6
Gross private domestic investment (capital formation)

25
Indirect business taxes

14
Income of unincorporated enterprises

20
Interest received by consumers from business

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

3
Net foreign investment (our investment in foreign countries)

-1
Personal consumption expenditures

110
Personal contribution to social insurance (employee payroll taxes)

2
Personal income taxes

16
Rental income of persons

5
Undistributed corporate profits

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

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

E. D. Domar
December 7, 1955

THE JOHNS HOPKINS UNIVERSITY

NATIONAL INCOME AND EMPLOYMENT
(Political Economy 3)

[SECOND] HOUR EXAMINATION
Fall Term, 1955-56

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

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

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

E. D. Domar
January 27, 1956

THE JOHNS HOPKINS UNIVERSITY

NATIONAL INCOME AND EMPLOYMENT
(Political Economy 3)

FINAL EXAMINATION — THREE HOURS
Fall Term
1955-56

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

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

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

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

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

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

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

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

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

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