Category: Exam Questions

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Exam Questions Harvard Undergraduate

Harvard. A.B. Division Examination, Economic Theory, 1939

Today’s posting is a transcription of the “special examination” questions in economic theory given at Harvard in May 1939.

Concentrators in Economics will have to pass in the spring their Junior year a general examination on the department of Economics, and in the spring of their Senior year an examination correlating Economics with either History or Government (this correlating exam may be abolished by 1942), and a third one on the student’s special field, which is chosen from a list of eleven, including economic theory, economic history, money and banking, industry, public utilities, public finance, labor problems, international economics, policies and agriculture.
Courses in allied fields, including Philosophy, Mathematics, History, Government, and Sociology, are suggested by the department for each of the special fields. In addition, Geography 1 is recommended in connection with international policies or agriculture.
[Source: Harvard Crimson, May 31, 1938]

A printed copy of questions for twelve A.B. examinations in economics at Harvard for the academic year 1938-39 can be found in the Lloyd A. Metzler papers at Duke’s Economists’ Papers Project. 

Economic Theory,
Economic History Since 1750,
Money and Finance,
Market Organization and Control,
Labor Economics and Social Reform.

  • One of the Six Correlation Examinations given to Honors Candidates. (May 12, 1939; 3 hours)

Economic History of Western Europe since 1750,
American Economic History,
History of Political and Economic Thought,
Public Administration and Finance,
Government Regulation of Industry,
Mathematical Economic Theory.

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If you find this posting interesting, here is the complete list of “artifacts” from the history of economics I have assembled. You can subscribe to Economics in the Rear-View Mirror below. There is also an opportunity for comment following each posting….

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DIVISION OF HISTORY, GOVERNMENT, AND ECONOMICS

DIVISION SPECIAL EXAMINATION
Economic Theory

(Three hours)

A candidate may, at his option, write hour essays on TWO topics in Part I and omit Part II.

Part I

(About one hour)

  1. Write an essay on one of the following topics:
    1. monopolistic competition and excess capacity,
    2. selling costs and social waste,
    3. the theory that interest is the price paid for ‘the service of waiting’,
    4. the effects on employment of a general cut in money wage-rates in the early stages of depression,
    5. the nature and causes of ‘pure profit’.

Part II

(About one hour)

Answer two questions.

  1. Explain, and discuss briefly, the meanings, the main ‘geometric’ properties and relations, and the main uses as aids to analysis, of the following ‘tools’: the demand curve for a firm’s output; the firm’s marginal revenue curve; its short- and long-period curves of average total unit costs; and its curve of marginal costs.
  2. “Although the ‘individual firm approach’ to value theory is in general superior, the ‘whole industry approach’ of Marshall still is capable of being used, without assuming ‘pure competition’, as an effective way of exploring certain important problems, which the other approach leaves out of sight.” Discuss.
  3. Explain the essential propositions of the ‘marginal productivity theory’ of income distribution in an economy characterized by pure competition; and the principal changes which must be made in this theory when account is taken (a) of monopoly elements in the markets in which products are sold, and (b) of monopoly elements in the markets in which factors are hired.
  4. “Those who hold that competitive allocation of economic resources in free markets would bring maximum satisfaction only if incomes were approximately equal, are in effect admitting that the market neither does, nor can, give sound guidance in any economic system that relies upon the profit motive to keep going.”
  5. Discuss the proper definitions, provinces, difference in assumptions, and relation to each other, of economic ‘statics’ and ‘dynamics’.
  6. Explain and discuss one major, novel concept introduced into economic theory by J. M. Keynes.

 

Part III

(About one hour)

Discuss two of the following questions.

  1. “Men are no longer units; they are being compulsorily coagulated into groups, and the forces of combination and regulation are producing a society very different from that which the nineteenth century Political Economy set out to interpret.”
  2. “The nature of an economic law is such that it can be neither established nor refuted by an appeal to the facts.”
  3. “The conception of the economic process as a circus off commodities and prices divorced from class relations is neither Marxian nor Classical.”
  4. “If we find something approaching pure competition in any branch of production, we can conclude that it is subject to increasing costs.”
  5. “Given fresh natural resources to develop, a rapidly increasing population, and foreign markets for goods and capital, even a trustified capitalism might be able to maintain high utilization of economic resources and an increasing national income. But in the absence of these favoring conditions it will be undermined more and more by direct government action to ward off the ever-present tendency to continuous depression.”

 

May 10, 1939.

Source: David M. Rubenstein Rare Book & Manuscript Library, Duke University. Lloyd A. Metzler Papers, Box 7; [Harvard University], Division of History, Government and Economics, Division Examinations for the Degree of A.B., 1938-39.

 

Categories
Chicago Courses Exam Questions Suggested Reading Syllabus

Chicago. Economic Doctrine, Modern Tendencies. Lange, 1942

“Modern Tendencies in Economic Economic Doctrine” was the title of the course taught by Oscar Lange in 1942 at the University of Chicago. According to the notes to the course taken by Norman Kaplan, the first two lectures appear to be Lange’s Apologia for the rationality postulate in modern economic theory that are then followed by lectures in which many themes of Hicks’ Value and Capital are addressed. Karl Marx, Max Weber and Talcott Parsons all get mention in his reflections on the rationality postulate. One can characterise Lange’s mission here and elsewhere as seeking to graft advances in economic theory from the marginal revolution that led to neoclassical economics to the trunk of (Marxian) classical economics.

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If you find this posting interesting, here is the complete list of “artifacts” from the history of economics I have assembled. You can subscribe to Economics in the Rear-View Mirror below. There is also an opportunity for comment following each posting….

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[Course Announcement, Economics 303, Spring 1942]

303. Modern Tendencies in Economic Doctrine.—A critical study of controversial questions in the general body of economic theory, and of some modern developments of that theory. The fundamentals of the theory of general equilibrium, the approach to dynamic economics, the foundations of welfare economics, the place of economics among the social sciences and problems of methodology will be discussed. Prerequisite: Economics 301 or equivalent. Spring, Tu., Th., 3:30-5:30, Lange.

 

Source: University of Chicago, The College and the Divisions for the Sessions of 1941-1942. Announcements Vol. XLI, No. 10 (April 25, 1941), p 307.

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Spring, 1942

ECONOMICS 303
BIBLIOGRAPHY

Required

J. R. Hicks. Value and Capital

H. Schultz. Theory and Measurement of Demand, chap. vi

J. Dean. “Department-Store Cost Functions,” Studies in Mathematical Economic and Econometrics, p. 222.

F. Lindahl. Studies in the Theory of Money and Capital, part I [(handwritten marginal note: (Read along with dynamic part of Hicks)]

H. Makower and J. Marschak. “Money and the Theory of Assets,” Economica (Aug. 1938)

M. Kalecki. “The Principle of Increasing Risk,” Essays in the Theory of Economic Fluctuations

G. L. S. Shackle. “Expectations and Employment,” Econ. J. (Sept. 1939)

________________. “The Nature of the Inducement to Invest,” RES (Oct. 1940)

A. G. Hart. “Uncertainty and Inducements to Invest,” RES (Oct. 1940)

T. Scitovszky. “A Study of Interest and Capital,” Economica (Aug. 1940)

J. Tinbergen. “Econometric Business Cycle Research,” RES (Feb. 1940)

R. F. Harrod. “Essay in Dynamic Theory,” Econ. J. (March 1939)

R. F. Kahn. “Some Notes on Ideal Output,” Econ. J. (March 1935)

N. Kaldor. “Welfare Propositions and Inter-Personal Comparability of Utility,” Econ. J. (Sept. 1939)

J. R. Hicks. “The Foundations of Welfare Economics,” Econ. J. (Dec. 1939)

A. P. Lerner. “From Vulgar Political Economy to Vulgar Marxism,” JPE (Aug. 1939)

H. D. Dickinson. “A Comparison of Marxian and Bourgeois Economics,” The Highway 1937

Eric Roll. “The Social Significance of Recent Trends in Economic Theory,” Canadian J. of Economics (Aug. 1940)

 

Optional

F. H. Knight. Risk, Uncertainty and Profit

G. Tintner. “A Contributionof the Non-Static Theory of Choice,” QJE (Feb. 1942)

A. G. Hart. “Anticipations, Uncertainty and Dynamic Planning,” J. of Business of the U. of C. (Oct. 1940)

J. R. Hicks. “A Suggestion for the Simplification of the Theory of Money,” Economica (1935)

P. N. Rosenstein-Rodan. “The Co-ordination of the General Theories of Money and Prices,” Economica (Aug. 1936)

J. Tinbergen. A Method and its Application to Investment Activity, League of Nations

H. D. Dickinson. The Economics of Socialism

M. H. Dobb. Political Economy and Capitalism

A. P. Lerner. “Statics and Dynamics in Socialist Economics,” Econ. J. (June 1937)

Talcott Parsons. The Structure of Social Action, chap. iv

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ECONOMICS 303
Spring, 1942

 

I. Discuss briefly the relation of the analysis of consumers’ behavior in terms of indifference curves and in terms of traditional marginal utility theory. Explain

(1) the concept of the marginal rate of substitution and its relation to marginal utility.

(2) the relation between the law of diminishing marginal utility and the convexity (toward the origin) of indifference curves.

(3) the assumptions underlying measurability of utility.

(4) the consequences which dispensing with the hypothesis that utility is measurable has for the law of diminishing marginal utility and for the Edgeworth-Pareto distinction between substitute, independent and complementary commodities.

(5) whether the use of indifference curves and of the marginal rate of substitution requires that utility be immeasurable.

 

II. Explain the difference between “co-operant” factors of production in the sense of Pigou (i.e., “complementary” factors in the sense of Edgeworth-Pareto) and complementary factors in the sense of Hicks-Allen-Schultz. Show why in the case of only two factors used to produce a product both definitions are equivalent but cease to be so if more than two factors are used. What is the purpose of replacing in the theory of production “co-operancy” by complementarity in the Hicks-Allen sense?

 

III. Describe the way in which uncertainty of price expectations influences the production plans of firms and the consumption plans of households. Explain

(1) what features of uncertain price expectations influence the planning of sales and purchases.

(2) apply your explanation to the determination of forward prices.

(3) discuss how uncertainty influences the length of the economic horizon and how this accounts for the insensitiveness of current investment to changes in interest rates.

 

IV. State the conditions of stability of general economic equilibrium and try to link them up with the relation of changes in the quantity of money to changes in the demand for cash balances. Don’t worry if you cannot answer the second part of the question. If you can answer it, give an example of a behavior of the monetary system which will make general equilibrium unstable.

 

Source: University of Chicago Archives. Norman Kaplan Papers, Box 2, Folder 6.

Image source: Wikipedia/commons.

Categories
Courses Curriculum Exam Questions Harvard Undergraduate

Harvard. Three Economics Courses. Texts and Exams, 1874-77.

In the mid-1870’s there were three courses in political economy offered at Harvard every year. The first was a one-term prescribed course in political economy required of all undergraduates in their sophomore year.  The other two courses in political economy were electives of which one was recommended for students of history while the other presumably put greater emphasis on economic theory. In the Harvard University Catalogues for the academic years 1874-5 through 1876-7, there is exactly one examination for each of these three courses. Using the annual Reports of the President of Harvard College, I was able to use enrollment data to determine the dates of the examinations.

The textbooks for the courses are identified and we see the first graduate students recorded in the class-enrollments for 1876-77.  I have grouped the courses below by academic year.

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If you find this posting interesting, here is the complete list of “artifacts” from the history of economics I have assembled. You can subscribe to Economics in the Rear-View Mirror below. There is also an opportunity for comment following each posting….

_____________________________________

1874-75

PRESCRIBED: POLITICAL ECONOMY.
Sophomore year

Prof. Dunbar. Fawcett’s Political Economy for Beginners. — Constitution of the United States (Alden’s Science of Government, omitting the first four and the last three chapters).
Two hours a week. Half-year. 208 students, 4 sections, 2 exercises per week for students, 8 exercises per week for instructor.

Source: Annual report of the President of Harvard University for 1874-75, p. 45.

 

[Note: Courses 7 and 8 are parallel Courses, Course 7 being preferable for students of History.]

ELECTIVE: PHILOSOPHY 7.
Political Economy

Prof. Dunbar. Political Economy. — Fawcett’s Manual of Political Economy. — Blanqui’s Histoire de l’Èconomie Politique en Europe.— Bagehot’s Lombard Street.
Three hours a week. 19 Seniors, 14 Juniors.
1 Sections, 3 exercises per week for students, 3 exercises per week for Instructor.

Source: Annual report of the President of Harvard University for 1875-76, p. 49. Also, Harvard University Catalogue, 1874-75, p. 56.

 

[EXAMINATION FOR 1874-75(?) FROM 1875-76 CATALOGUE]
PHILOSOPHY 7.

[In answering the questions do not change their order.]

  1. State the general principles which determine the exchange of commodities between two countries, and show the analogy between this case and that of exchange between individuals under the familiar law of demand and supply.
  1. If the United States were to levy an export duty on cotton, on whom would it fall? What objection is there to the proposition?
  1. It is known that the people of the United States are debtors to Europe to a large amount; should our annual returns show a balance of imports or of exports? Why? If, in fact, the balance appears to be the wrong way, what conclusion is to be drawn?
  1. With commerce in its normal condition, would exchange on Europe be in our favor, against us, or at par? Why? Would this state of things be for our disadvantage or not?
  1. What causes the tendency of profits to fall as a nation advances?
  1. If a tax were laid, at a uniform rate, on all property of every description, would it meet the requirements of Adam Smith’s first rule? Give the reason.
  1. Why should not large incomes be taxed at a higher rate than moderate ones; as, e.g., incomes of $10,000 and upwards higher than those between $5,000 and $10,000?
  1. How much control has the Bank of England over the rate of interest in the money market?
  1. Under the national bank act, how does the action of our banks, when the reserves are suddenly reduced, differ from that of the Bank of England in like case?
  1. What difference would there be likely to be in the operation of these two methods, at a time when the condition of monetary affairs is critical?
  1. State the following leading facts relating to the issue of legal tender notes: —

(1) When they were first authorized;
(2) The maximum prescribed by the act of June, 1864;
(3) The point to which they were reduced by Mr. McCulloch;
(4) The amount of expansion under Mr. Richardson
(5) The provision contained in the act of June, 1874;
(6) The provisions for withdrawal in the act of January, 1875.

  1. How do the deposit of bonds required of the national banks and the reserve required for their circulation differ in purpose?
  1. Give the date and circumstances of the first issue of fractional currency.
  1. Why did the government issue 5-20 bonds rather than 20-year bonds bearing the same rate of interest? Which is more valuable? Why?
  2. If all business were done for cash, what difference would it make as to the ease of resuming specie payments? Why?

Source: The Harvard University Catalogue, 1875-76. Cambridge, p. 238.

ELECTIVE: PHILOSOPHY 8.
Political Economy

Prof. Dunbar. Political Economy. — J. S. Mill’s Principles of Political Economy. — Bagehot’s Lombard Street. Legislation of the United States on Currency and Finance.

Three hours a week. — 65 Seniors, 33 Juniors.
2 Sections, 3 exercises per week for students, 6 exercises per week for instructor.

Source: Annual report of the President of Harvard University for 1874-75, p. 48. Also, Harvard University Catalogue, 1874-75, p. 56.

 

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1875-76

PRESCRIBED: POLITICAL ECONOMY.
Sophomore year

Mr. Macvane. Fawcett’s Political Economy for Beginners. — Constitution of the United States (Alden’s Science of Government, omitting the first four and the last three chapters).
Two hours a week. Second half-year. 182 students, 4 sections, 2 exercises per week for students, 8 exercises per week for Instructor.

Source: Annual report of the President of Harvard University for 1875-76, p. 44.

 

[Examination of 1875-76(?), from 1876-77 Catalogue]
PRESCRIBED POLITICAL ECONOMY.

POLITICAL ECONOMY.

[Those who take the examination in the Constitution may omit the questions marked with a star (*).]

  1. Explain the service which Capital renders to production. Should you call a coal mine capital? a steam engine? a mill stream? Why?
  2. Define Value. Show whether a general rise of values is possible. Distinguish between natural value and market value. Do they ever coincide?
  3. What do you understand to be “the value of money “? On what does it depend? How does a rise in the value of money show itself?
  4. Mention the three classes into which commodities are divided in relation to their value. In which class should you place gold and silver?
  5. (*) Show how far the action of demand and supply controls the value of commodities in each class.
  6. Explain the relations between rent of land, price of food, and growth of population.
  7. What is meant by cost of labor? Show that a man’s wages may be low and yet the cost of his labor be high. Point out the connection between cost of labor and profit of capital.
  8. (*) Wherein do productive and unproductive consumption differ? “A knowledge of one of the first principles of political economy is sufficient to show that society is no gainer by the reckless expenditure of the spendthrift:” State the principle referred to, and illustrate the truth of the assertion.
  9. (*) Show that foreign trade is advantageous to both countries only when the relative cost of the commodities exchanged is different in the two countries. When exports and imports fail to balance each other in any country, how is the equilibrium restored?
  10. Give the four “canons of taxation,” and show the application of any two of them. How may the burden of taxation be distributed according to the first canon, in a country where the revenue is raised by duties on tea, sugar, wines, etc.
  11. (*) Distinguish direct from indirect taxes. To which class does the income tax belong? Ought permanent and temporary incomes to be taxed equally?
  12. (*) Show whether high wages make high prices. Suppose that laborers, by combinations and strikes, should succeed in raising wages so much as to bring profits down to a very low figure, would they be benefited thereby? Why?

 

CONSTITUTION OF THE UNITED STATES.

[Those who take the examination in Political Economy will answer questions 1-7 only.]

  1. Explain the terms exclusive and concurrent as applied to legislative power. Mention two subjects in reference to which Congress has exclusive, and two in which it has concurrent, power of legislation.
  2. Through what stages must bills go in their passage through each house? Mention the ways in which a bill may become a law. In what case does a bill fail to become a law though passed by both houses and not vetoed by the President?
  3. State the qualifications required for Vice-President; for senators. Describe the mode of electing senators. How, and under what authority, has this mode been established?
  4. Show how the amendments relating to slavery (XIII.-XV.) affected the apportionment of representatives. How far has the right of each State to make its own franchise law been abridged by these amendments?
  5. When a president is to be elected, how many electors are appointed by each State? How are the electors chosen? What control has Congress over the election?
  6. What officers are subject to impeachment? For what offences? What is the effect of resigning? How may persons convicted on impeachment be punished?
  7. Give the provisions of the Constitution in reference to trial by jury. Describe the function of grand juries. Explain fully “the privilege of the writ of habeas corpus.”
  8. Define treason. What courts have jurisdiction in cases of treason? What evidence is necessary in order to convict? What is provided in the Constitution as the punishment of treason 1
  9. How are direct taxes apportioned? What taxes are direct in the meaning of the Constitution? Compare this sense of the word with its use in Political Economy.
  10. Give the provisions in the original Constitution relating directly or indirectly to the subject of slavery. What difficulties, arising from the existence of slavery, were encountered in framing the Constitution?
  11. Taxes on exports. Taxes on immigrants.
  12. The treaty-making power in the United States and in England.
  13. Copyright and patent rights.
  14. Naturalization of aliens. Expatriation.
  15. Bills of credit. Legal-tender notes.

Source: Harvard University Catalogue, 1876-77, p. 229.

 

ELECTIVE: PHILOSOPHY 5.
Political Economy

Prof. Dunbar. Political Economy. — J. S. Mill’s Political Economy. — Bagehot’s Lombard Street. –Lectures on the Financial Legislation of the United States.
Three hours a week. Second half-year. 36 Seniors, 80 Juniors, 1 Sophomore.
2 Sections, 3 exercises per week for students, 6 exercises per week for Instructor.

Source: Annual report of the President of Harvard University for 1875-76, p. 49.

 

ELECTIVE: PHILOSOPHY 6.
Political Economy

Prof. Dunbar. Advanced Political Economy. — Cairnes’s Leading Principles of Political Economy. — McKean’s Condensation of Carey’s Social Science. Lectures.
Three hours a week. 24 Seniors.
1 Sections, 3 exercises per week for students, 3 exercises per week for Instructor.

Source: Annual report of the President of Harvard University for 1875-76, p. 49.

 

[EXAMINATION OF 1875-76(?) FROM 1876-77 CATALOGUE]
PHILOSOPHY 6.

  1. Give Mr. Cairnes’s statement of the wages-fund doctrine. (p. 167.)
  2. Criticise the following extracts from Walker’s “Wages Question,”
  3. 128-130: —

“A popular theory of wages is based upon the assumption that wages are paid out of capital, the saved results of the industry of the past. Hence, it is argued, capital must furnish the measure of wages. On the contrary, I hold that wages are, in a philosophical view of the subject, paid out of the product of present industry, and hence that production furnishes the true measure of wages. … So long as additional profits are to be made by the employment of additional labor, so long a sufficient reason for production exists; when profit is no longer expected, the reason for production ceases. At this point the mere fact that the employer has capital at his command no more constitutes a reason why he should use it in production when he can get no profits, than the fact that the laborer has legs and arms constitutes a reason why he should work when he can get no wages.

“The employer purchases labor with a view to the product of the labor; and the kind and amount of this product determine what wages he can afford to pay. … If the product is to be greater, he can afford to pay more; if it is to be smaller, he must, for his own interest, pay less. It is, then, for the sake of future production that the laborers are employed, not at all because the employer has possession of a fund which he must disburse; and it is the value of the product, such as it is likely to prove, which determines the amount of the wages that can be paid, not at all the amount of wealth which the employer has in possession or can command. Thus it is production, not capital, which furnishes the motive for employment, and the measure of wages.”

  1. What is the reasoning which leads Mr. Cairnes to predict an ultimate fall of prices in the United States as compared with prices elsewhere? How will a protective tariff affect the movement? (p. 304.)
  2. A recent writer says: —

“We will be able to resume specie payments when we cease to rank among the debtor nations, when our national debt is owed to our own people, and when our industry is adequate to the supply of the nation’s need of manufactured goods.” (Thompson’s “Social Science,” p. 206.)

How essential are these three conditions, severally, for the resumption of specie payments?

  1. Criticise the argument contained in the following proposition :—

“With every increase in the facility of reproduction, there is a decline in the value of all existing things of a similar kind, attended by a diminution in the price paid for their use. The charge for the use of the existing money tends, therefore, to decline as man acquires control over the great forces provided by the Creator for his service; as is shown by the gradual diminution of the rate of interest in every advancing country.”

  1. Compare the generally received principle that paper currency tends to expel coin, with the following: —

“All commodities tend to move towards those places at which they are most utilized. . . . The note and the check increase the utility of the precious metals; and therefore is it, that money tends to flow towards those places at which notes and checks are most in use, — passing, in America, from the Southern and Western States towards the Northern and Eastern ones, and from America towards England.”

  1. What is Mr. Carey’s doctrine as to the value of land in an advancing society? Compare it with his general doctrine as to the determination of value hy cost of reproduction.
  2. What is Mr. Carey’s general law of distribution between labor and capital? Give the general course of reasoning leading to this law.
  3. Discuss Mr. Carey’s objection to the Malthusian theory, that increase of numbers is in the inverse ratio of development, man multiplying slowly while the lower forms of animal and vegetable life multiply rapidly.
  4. What logical necessity has compelled Mr. Carey to assume the existence of a law of diminishing fecundity in the human race? Compare this with the process of reasoning which leads to the Malthusian conclusion as to the necessary operation of ” checks,” positive and preventive.

Source:  Harvard University Catalogue, 1876-77, p. 233-4.

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1876-77 

NO LONGER PRESCRIBED: POLITICAL ECONOMY.
Sophomore year

Political Economy is no longer listed among the sophomore prescribed courses according the Annual reports of the President of Harvard University for 1876-77, pp. 44-45.   The only prescribed course from the department of philosophy was a junior year course of Logic and Psychology, each for one semester.  Cf. Catalogue of Harvard University, 1876-77, p. 55.

ELECTIVE: PHILOSOPHY 5.
Political Economy

Prof. Dunbar. Political Economy. — J. S. Mill’s Political Economy. — Financial Legislation of the United States. Three hours a week. 1 Graduate, 30 Seniors, 64 Juniors, 7 Sophomores, 2 Unmatriculated.

Source: Annual report of the President of Harvard University for 1876-77, p. 49.

ELECTIVE: PHILOSOPHY 6.
Advanced Political Economy

Prof. Dunbar. Advanced Political Economy. — Cairnes’s Leading Principles of Political Economy. — McKean’s Condensation of Carey’s Social Science.
Three hours a week.  2 Graduates, 22 Seniors, 3 Juniors.

Source: Annual report of the President of Harvard University for 1876-77, p. 49.

 

Categories
Exam Questions Harvard

Harvard. Economics Departmental (General) Exam for A.B., 1939

Majors in economics at Harvard had to pass a battery of examinations in their Junior and Senior years (7.5 hours for non-honors candidates and 10.5 hours for honors candidates) before they could graduate. A printed copy of questions for thirteen component A.B. examinations in economics at Harvard for the academic year 1938-39 (over thirty pages!) are to be found in the Lloyd A. Metzler papers at Duke’s Economists’ Papers Project. 

Concentrators in Economics will have to pass in the spring their Junior year a general examination on the department of Economics, and in the spring of their Senior year an examination correlating Economics with either History or Government (this correlating exam may be abolished by 1942), and a third one on the student’s special field, which is chosen from a list of eleven, including economic theory, economic history, money and banking, industry, public utilities, public finance, labor problems, international economics, policies and agriculture.
Courses in allied fields, including Philosophy, Mathematics, History, Government, and Sociology, are suggested by the department for each of the special fields. In addition, Geography 1 is recommended in connection with international policies or agriculture.
[Source: Harvard Crimson, May 31, 1938]

This posting gives the questions from the Departmental Examination and the topics for the Essay Paper that all economics majors were required to take.  

  • One Departmental Examination from the Department of Economics consisting of two parts:

Essay Paper (May 5, 1939; 1.5 hours)
Departmental Examination (May 8, 1939; 3 hours)

  • One of the Five Division Special Examinations. (May 10, 1939; 3 hours)

Economic Theory,
Economic History since 1750,
Money and Finance,
Market Organization and Control,
Labor Economics and Social Reform.

  • One of the Six Correlation Examinations given to Honors Candidates. (May 12, 1939; 3 hours)

Economic History of Western Europe since 1750,
American Economic History,
History of Political and Economic Thought,
Public Administration and Finance,
Government Regulation of Industry,
Mathematical Economic Theory.

 

______________________

If you find this posting interesting, here is the complete list of “artifacts” from the history of economics I have assembled thus far. You can subscribe to Economics in the Rear-View Mirror below.  There is also an opportunity for comment following each posting….

 

 

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DIVISION OF HISTORY, GOVERNMENT, AND ECONOMICS

DEPARTMENTAL EXAMINATION
DEPARTMENT OF ECONOMICS
[1939]

(Three hours)

Answer SIX questions; at least ONE question must be answered in each part. A senior may not take more than ONE question in that section of Part II which covers his special field.

PART I

  1. How may industrial fluctuations affect the distribution of income?
  2. Explain and discuss the probable immediate economic consequences in this country of the outbreak of a general European war in the near future. If we should stay out of it, what might be some of the long-run effects of the war on our economy?
  3. What various causes may lead to an increase in the general level of real wages in the country?
  4. Discuss some of the economic implications of declining population growth.
  5. Do you think that abolition of the institution of inheritance would have important social and economic consequences?
  6. If there were one hundred automobile manufacturing firms, would the process of determination of the prices of automobiles be different from what it is now? Do you think that the prices would be different? Explain.
  7. Explain briefly the principal short-run and long-run consequences in an economy of a succession of cost-reducing innovations by individual firms.
  8. Name and explain briefly as many of the possible economic consequences of the New England hurricane as you can think of.

PART II

A
STATISTICS AND ACCOUNTING

  1. What problems would be met in an endeavor to obtain a curve of marginal cost by an analysis of the actual monthly expense data of the firm?
  2. How would you treat a time series of employment data to reveal (a) the rate of change in secular growth and (b) changes in the intensity of cyclical fluctuations?
  3. What differences do you find between concepts used by accountants and those used by economists in analyzing profits? Do you think that these differences should be eliminated? Explain.
  4. Discuss the relevance to different situations of various methods of measuring appreciation.

B
PUBLIC POLICY AND SOCIAL STRUCTURE
(As Aspects of Modern Economic History)

  1. Discuss the causes, course, and outcome, and the interests and the views represented on both sides, of the struggle over the money question in this country in the last three decades of the nineteenth century.
  2. “The achievements in economic policy of America’s liberal or progressive statesmen have always been limited, because they have approached their tasks in this field too largely as moral crusaders against ‘predatory’ business interests, and too little as unbiased students of the technical economic problems involved.” Discuss, with special reference to the career of either Theodore Roosevelt or Woodrow Wilson.
  3. What British statesman, during the 19th century, made the most important contributions in developing or establishing the public policies which chiefly aided, or removed impediments to, or reformed abuses connected with, Great Britain’s industrial development? Name several statesmen and the principal measures or policies each one stood for, and discuss the career and achievements of one man in some detail.
  4. Sketch the social security legislation in Germany prior to 1910. Do you think that this legislation had any influence on the strength and achievements of the Social Democratic Party in the post-war period?

C
MONEY AND FINANCE

  1. How do you account for changes in the velocity of circulation of money in bank credit? What are some of the consequences of changes in velocity? Can velocity be controlled by the central bank authorities?
  2. “The whirling dervishes of deflation and the experts of castor-oil economics assure us that ultimately we arrive at some mysterious automatic equilibrium point from which recovery can proceed.”
  3. Discuss the natures and effects on world economic conditions of some of the principal new types of restrictions on international trade imposed by various countries in the last two decades.
  4. “The disappearance of the gold standard is the disappearance of one of the safeguards of private property. For in giving the State a free hand to manage the money and credit supply, we are giving political pressure-groups a potent weapon for effecting arbitrary changes in all property-values and in the distribution of wealth.”
  5. Discuss the possible effects of each one of three different kinds of taxes on the annual amount of new investment in capital goods in the community.
  6. Would you advocate return of all the leading nations to a gold standard of the pre-war type? If not, what sort of international monetary arrangements do you favor?
  7. “The advocates of public spending as the way to open ‘save capitalism’ are either disingenuous about their objective, or ignorant of the nature of capitalism. For the continuance of capitalism requires economy in public, as well as in private spending.”

 

D
MARKET ORGANIZATION AND CONTROL

  1. “Corporate reorganization is merely a family squabble among investors over a pie which turned out to be a donut. The results have no significance to consumers or to labor.”
  2. Explain why you favor or oppose government ownership and operation (in the United States) of the railroads or of the bituminous coal industry.
  3. “Once recovery has been attained most agricultural problems can be left to the market.”
  4. Should differences in electric rates to different consumers reflect only differences in costs?
  5. “The law should be revised so as to prevent any business from becoming bigger than it can grow when subjected to the test of the free market.”
  6. Discuss the problem of improving efficiency in the distribution of some one farm product, or group of products, with respect to obstacles, possible achievements, and possible results to farmers, processors, middlemen, and consumers.
  7. “The price-cutter is worse than a criminal – he is a fool. He not only pulls down the standing of his goods; he pulls down himself and his trade. He scuttles the ship in which he himself is afloat. Price-cutting is not business any more than smallpox is health.”

 

E
LABOR ECONOMICS AND SOCIAL REFORM

  1. Discuss the relative merits, from the standpoints of labor and the public, under present-day American industrial conditions, of the principles of labor organization represented by the A. F. of L. And those represented by the C. I. O.
  2. “The rise of Fascism is due to the failure of events to bear out one of the predictions of Marx. In Germany and in Italy the lower-middle-class, instead of disappearing, has become not only desperate enough but strong enough to impose its patriotic will on both the plutocracy and the proletariat.”
  3. Do you think that a spread of collective bargaining in a community is likely to have any appreciable consequences for the total national income and the total amount of employment?
  4. “A vigorous labor movement always has as its basis in the motives and mentality of the workers, much less their economic interests as individuals, than their capacity for emotional loyalty to an ideology and a fighting ‘cause’ which plays the role, in their lives, of a class religion.”
  5. What basic tenets of Marxism in economic theory underlie both its explanation of capitalist crises or depressions, and its explanation of imperialist wars? Explain the underlying theory and how it leads to these two theories, and discuss the basic issues as issues in economic theory.
  6. What is your opinion of the view that redistributing wealth by taxation would be an ineffectual method of reform because it would leave untouched the unequal distribution of power.
  7. “If we wish to preserve our democratic, liberal, and capitalistic or ‘free enterprise’ society, by making it possible for the masses to be and remain contented with it, no means to this end is more important than development of an adequate program of social security.”

 

PART III

  1. “The idea that the sins and the errors of judgment of businessmen bring on depressions is a groundless myth. The business cycle is the product of impersonal forces, and would follow the same course even if all men were invariably honest and made no mistakes.”
  2. “To such extent as possible people are able to engage in competition upon the basis of quality and service, rather than price, trade will be raised to a higher level, and will be more to the advantage of the general public.”
  3. “If all employers agreed to pay the same wages then higher wages will hurt no employer, but will, instead, benefit all employers by increasing demand for their products.”
  4. “So long as consumers do not have purchasing power there is no need for further investment to increase facilities for production. If no one can buy, the facilities are not needed.”
  5. “Stabilization of individual prices is inherent in our financial structure because industry is based largely on a credit structure and any radical drop in prices makes fixed charges unbearable.”
  6. “Unemployment is a problem which Society must solve and we believe it is a better solved by businessmen than by passing it over to the government for solutions.”
  7. “The prices created in the process of buying and selling regulate our lives far more minutely than could an efficient despot – and often as arbitrarily as a capricious tyrant.”
  8. “Practical questions no more form part of the science of Political Economy and navigation forms part of the science of astronomy. The conclusions of the economic of the economist do not authorize him in adding a single syllable of advice.”

May 8, 1939.

 

_____________________________

 

DIVISION OF HISTORY, GOVERNMENT, AND ECONOMICS

 

ESSAY PAPER
DEPARTMENT OF ECONOMICS

(One hour and a half)

Candidates for honors may write on ONE topic only. Others may, if they prefer, write on TWO topics. Please note on the front cover of the bluebook the number of each topic upon which you write.

  1. The meaning and significance of economic progress.
  2. Economics of war – planning and financing.
  3. Would political and economic isolation be the best course for the United States?
  4. The concept of ideal output in a community.
  5. “The disappearance of the free competitive market must mean the eventual disappearance of liberty and democracy, political and economic.”
  6. The significance of specialization in economic activity.
  7. Effects of the business cycle on farmers, labor, investors, professional men, retailers.
  8. “The New Deal efforts at recovery were supported by theory, especially by doctrines explaining prosperity, that had gained popularity during the New Era of the twenties.”
  9. A book review giving your assessment of An Economic Program for American Democracy.
  10. The concept of ideal distribution of income.
  11. “The competitive price system is a scheme of social organization without resort to mass forces.”
  12. The significance of monopoly elements, of various sorts, in an economy.
  13. The functions of the study and teaching of economics.
  14. “The twentieth century clearly does not offer any comfortable prospect of a smoothly functioning economic Utopia.”
  15. A comparison (for the United States or for the world at large) of the principal features of the period of boom and depression in the 1920’s and to 1930’s with those of any period of boom and depression in the nineteenth century.
  16. The economic consequences of the next European war.
  17. “The growing acceptance of the idea that there must be a large, permanent body of unemployed is a passive recognition of the defeat of private capitalism.”
  18. The importance, and the outlines of the skillful integration of government policies with respect to money, public finance, industry, agriculture, public utilities, and labor into a consistent whole, for the purpose of achieving full use of the country’s economic resources.
  19. “The economic order of the western world is undergoing in this generation set of structural changes no less basic and profound in character and that transformation of economic life and institutions which we are wont to designate by the phrase ‘Industrial Revolution_.”
  20. Can economic theory be of practical value to business executives?
  21. Can economic theory aid in the development of public policy?
  22. Can economic theory explain “what goes on” in the economy of a totalitarian state?

May 5, 1939.

Source: David M. Rubenstein Rare Book & Manuscript Library, Duke University. Lloyd A. Metzler Papers, Box 7; [Harvard University], Division of History, Government and Economics, Division Examinations for the Degree of A.B., 1938-39.

Categories
Courses Exam Questions Harvard Socialism Suggested Reading Syllabus

Harvard. Schumpeter’s Socialism Course. Syllabus and Exam, 1946

Welcome to my blog, Economics in the Rear-View Mirror. If you find this posting interesting, here is the list of “artifacts” from the history of economics I have already assembled for you to sample or click on the search icon in the upper right to explore by name, university, or category. You can subscribe to my blog below.  There is also an opportunity to comment below….

______________________

…Regular vistors to this blog have seen that an economics course on socialist thought and movements was a regular part of the curriculum at Harvard during the first half of the twentieth century. Up to this posting I have included material from the following courses: Thomas Nixon Carver’s SINGLE TAX, SOCIALISM, ANARCHISM (1919-20), Edward Mason and Paul Sweezy’s ECONOMICS OF SOCIALISM (1938), and Paul Sweezy’s ECONOMICS OF SOCIALISM (1940).

This course became part of Joseph Schumpeter’s teaching portfolio in the 1940s. His course outline and exam for the winter semester of 1943-44 has been posted as well.

______________________

[Course Announcement]

Economics 11b. Economics of Socialism

Half-course (spring term). Mon., Wed., and (at the pleasure of the instructor) Fri., at  10. Professor Schumpeter.

Source: Announcement of the Courses of Instruction Offered by the Faculty of Arts and Sciences During 1945-46. Official Register of Harvard University, Vol. 42, No. 8 (March 31, 1945), p. 36.

______________________

[Enrollment]

[Economics] 11b (spring term) Professor Schumpeter. –Economics of Socialism.

5 Graduates, 18 Seniors, 21 Juniors, 15 Sophomores, 1 Freshman, 8 Radcliffe, 9 Other.

Source: Harvard University. Report of the President of Harvard College and Reports of Departments for 1945-46, p. 58.

______________________

ECONOMICS 11b
1945-46
OUTLINE AND ASSIGNMENTS

[Joseph A. Schumpeter]

I.   FIRST TWO WEEKS: The Socialist Issue.

Socialist ideas and socialist parties. Socialism and the labor movement. Laborite and intellectualist socialism. The definition of socialism.

*H. W. Laidler, Social-Economic Movements, 1944, esp. Parts V and VI.
Encyclopaedia of the Social Sciences, article on Socialist and Labor Parties.

II. THIRD TO FIFTH WEEK: The Theory of Centralist Socialism., 1938

*O. Lange and F. M. Taylor, The Economic Theory of Socialism, 1938.
[A. P. Lerner, The Economics of Control, 1944.]

III. SIXTH TO NINTH WEEK: The Economic Interpretation of History. The Class Struggle, and the Marxist Theory of Capitalism.

*Karl Marx, Capital, Volume I, chs. I, IV, V, VI.
Marx and Engels, The Communist Manifesto.
*Paul M. Sweezy, The Theory of Capitalist Development, 1942, chs. I-VI
(pp. 1-108).

IV. TENTH TO TWELFTH WEEK: The Socialist Theory of the State and of the Proletarian Revolution, Imperialism, National Socialism.

V.I. Lenin, State and Revolution, 1926.
[M. Dobb, Political Economy and Capitalism, ch. VII.]
Paul M. Sweezy, The Theory of Capitalist Development, Chs. XIII-XIX.

READING PERIOD ASSIGNMENT

Read E. Bernstein, Evolutionary Socialism, 1909, especially pp. 18-95, and survey again the items in the reading list marked *.

NOTE: The items in square brackets are recommended but not assigned. So is: Bienstock, Gregory, and Schwartz, Management in Russian Industry and Agriculture, 1944.

Source: Harvard University Archives. Syllabi, course outlines and reading lists in Economics, 1895-2003. HUC 8522.2.1. Box 4, Folder “Economics, 1945-1946 (1 of 2)”.

______________________

1945 – 46
Harvard University
Economics 11b

One question may be omitted. Arrange your answers in the order of the questions.

  1. What is Syndicalism?
  2. Characterize the type, aims, and importance of the group that called itself Fabians.
  3. “Rational allocation of factors of production presupposes the existence of prices. Prices presuppose free markets. Hence the problem of rational allocation of factors of production would be insoluble in a socialist society.” Criticize.
  4. Discuss the various methods by which investment could be financed (that is, the resources for the extension of the productive apparatus could be provided) in a socialist society.
  5. Explain and criticize what is known as the Marxist Theory of Exploitation.
  6. What meaning do you attach to, and what do you think of, the proposition that Socialism is “inevitable?”

Final, May 1946

Source: Harvard University Archives. Joseph Schumpeter Papers. Lecture Notes Box 2, Folder “Course notes (Jan 1950—Found in Drawer—Cambridge Study) Misc 1945-1947”.

Image Source: Harvard Album 1947.

Categories
Chicago Curriculum Economists Exam Questions

Chicago. Paul Samuelson and Jacob Mosak. A.B. Comprehensive Exam Grades. 1935

November 2003. Samuelson and I after Bergson Commemoration.

Welcome to my blog, Economics in the Rear-View Mirror. If you find this posting interesting, here is the complete list of “artifacts” from the history of economics I have assembled for you to sample or click on the search icon in the upper right to explore by name, university, or category. You can subscribe to my blog below.  There is also an opportunity to comment following each posting….

__________________________

Paul Samuelson and Jacob Mosak were undergraduate classmates at the University of Chicago. The two of them along with 27 other students were required to take a battery of comprehensive examinations in economics for the Bachelor’s degree.   I found the distribution of grades for the comprehensive exams over the period 1934-1938 in the economic department records, as well as the distribution of grades for the separate courses taken by the 29 students.

Plot-spoiler: Paul Samuelson was the top undergraduate student at Chicago in the Spring Quarter of 1935 (or perhaps ever) and the first runner up, who lived to the grand old age of 99,  also went on to have a full and distinguished career as an economics professional. Mosak’s greatest research hit in economics was his Cowles Foundation Monograph, General Equilibrium Theory in International Trade (1944).

I have appended to this posting descriptive material about the comprehensive exams and the descriptions of the individual courses along with instructor names according to the 1934-1935 Announcements.

_______________________

REPORT ON PAST COMPREHENSIVE EXAMINATIONS FOR THE BACHELOR’S DEGREE IN THE DEPARTMENT OF ECONOMICS

 

Quarter

 A B C D E F

Total

Spring, 1934

 1 1

Winter, 1935

 1 3 3* 7

Spring, 1935

 3 11 12     3

29
Summer, 1935 1 2 1

4
Autumn, 1935 2 1 3

6

Winter, 1936

 1 1 3 2 7

Spring, 1936

 3 8 5 3 0 3 22

Summer, 1936

 1 4 3 8
Autumn, 1936 1 2 1

4
Winter, 1937 1 2 1

4
Spring, 1937 3 8 4 4 3

22

Summer, 1937

 1 5   2   2 10
15 35 35 14 0 25

124
*Includes one unfinished examination. [name omitted]
[Handwritten additions:]

Winter, 1938

   1 3     1 5

Spring, 1938

 3 4 10 3   2 22
18 40 48 17   28

151
% 11.92 26.49 31.79 11.25   18.54

 

______________________

[Number of students awarded a particular grade by economics course numbers for the Spring Quarter 1935 comprehensive examinations]

209 210* 211 212 220 221-2 230 240 260 270** [Comp. Avg. ]

A+

 1 0 0 1 0 0 0 0 0 1

A

 1 0 2 0 1 0 1 2 4 0 1

A-

 5 1 1 0 2 0 1 1 1 0 1

B+

 7 1 1 0 2 0 1 4 1 0 1

B

 6 4 2 0 1 0 3 5 3 4 9

B-

 4 1 1 0 2 0 5 3 1 2 1

C+

 0 2 6 0 0 0 4 3 3 7

4
C 1 6 5 0 4 9 3 1 0 1

8
C- 2 4 3 0 1 0 2 0 1 2

0
D+ 0 3 0 0 2 0 2 0 0 0

0
D 0 2 3 0 1 3 2 0 0 2

0
D- 0 2 0 0 0 0 4 0 1 0

0
E/F 2 3 4 0 0 1 1 0 2 3

3

Samuelson

 A A- A A A A A A+
Mosak A+ B+ A A+ C- B- A

A

*Numerical grades reported for this course, converted to letter grade using the following scale:

A+ (95-100); A (93-94); A- (90-92);
B+ (87-89); B (83-86);       B- (80-82);
C+ (77-79); C (73-76); C- (70-72);
D+ (67-69); D (63-66); D- (60-62);
F (0-59).

**For four cases of exact border-line grades in Economics 270, e.g. B+/A-, I have assigned the higher grade.

______________________

[Role of the Comprehensive Examinations]

THE BACHELOR’S DEGREE

On admission to the Division, the students specializing in the Department arranges with the Departmental Counselor a suitable program of study in economics. He is expected to include in his departmental program the materials of 7 courses beyond Social science I and II. His comprehensive examination in economics will cover economic theory, accounting, statistics, economic history, and money and banking, as developed in Economics 209, 210, 211, 220 or 221, and 230. The comprehensive examination will also cover two elective fields, preferably labor, government finance, or international economic relations, as developed in Economics 240, 260, and 270. The scope and content of the several courses mentioned are indicated in the course announcements printed below.

[…]

THE DEGREE OF MASTER OF ARTS

[…]

The specific requirements for the Master’s degree are:

  1. A minimum of 8 courses, or their equivalent (of which at least 6 must be in Grades II and III above). At some previous time the candidate should have covered the substantial equivalent of the requirements for the Bachelor’s degree in Economics. This equivalence may be shown by courses taken or by examination. The candidate must also have the preparation in the other social sciences required for the Bachelor’s degree at the University….

[…]

[Economics Course Descriptions 1934-35]

 

  1. Intermediate Economic Theory. – A course designed for undergraduates majoring in economics who have completed the other departmental requirements for the degree, and for graduate students with limited training in systematic theory. It deals with forces controlling, through the price system, the organization of economic activity. Prerequisite: Senior standing and Economics 210, 211, 230 or their equivalents. Summer, 10:00; Autumn, 11:00; Winter, 11:00, [Paul Howard] Douglas.
  1. Introduction to Accounting. – (1) The principles of double-entry accounting. (2) The principles of valuation and of income determination; the mathematical problems arising from accumulating and discounting future sums and annuities. (3) A survey of the uses and limitations of accounting information and compares the concepts of cost used by accountants and by economists. Prerequisite: Social Science I and II or their equivalent. Summer, 11:00, [Wilfrid Merrill] Helms; Autumn, 9:00, Shields; Spring, 11:00, [Theodore Otte] Yntema.
  1. Introduction to Statistics. – The elementary principles of statistics. Main topics: frequency distributions, correlations, time series, index numbers. Prerequisite: Mathematics 104 or its equivalent. Summer, 10:00, [John Higson] Cover; Autumn, 11:00, [Henry] Schultz; Winter, 9:00,—.
  2. Intermediate Statistics. [not offered 1934-35, description from 1933-34 follows] This course extends the scope of Economics 211 to include a brief introduction to partial and multiple correlation, but its main objective is to make the elementary statistical methods part of the working equipment of the student. Prerequisite: Economics 211 and introductory courses in economics, accounting, finance, and marketing. Spring 9:00, [Aaron] Director.
  1. Economic History of the United States. – A general survey from the colonial settlements down to the present emphasizing the period since 1860. Prerequisite: Social Science I and II or their equivalent. Summer, 8:00, [Albert Gailord] Hart; Winter 1:30, [Chester Whitney] Wright.
  1. Economic History of Classical and Western European Civilization. –A survey of industrial conditions in their relation to economic, social, political, and cultural history at selected periods and in selected countries, undertaken with a view to understanding the nature and significance of modern industrialism. Prerequisite: Social Science I and 2 courses in European history, or equivalent. Autumn, 1:30; Spring, 1:30, [John Ulric] Nef.
  1. Introduction to Money and Banking. – A study of the factors which determine the value of money in the short and in the long run; the problem of index numbers of price levels; and the operation of the commercial banking system and its relation to the price level and general business activity. Prerequisite: Social Science I and II or equivalent. Summer, 9:00, [Albert Gailord] Hart; Autumn, 1:30, [Lloyd Wynn] Mints; Spring, 9:00, [Albert Gailord] Hart.
  1. Labor Problems. – General survey of problems of labor arising in a system of free enterprise. Poverty, inequality, conditions of work, and unemployment are some of the topics considered. Trade-unionism and collective bargaining contrasted with state legislation as devices for dealing with these problems. Prerequisite: Social Science I and II or equivalent. Spring, 10:00, [Paul Howard] Douglas.
  1. Introduction to Government Finance. – A course dealing with fiscal problems of government, mainly in their economic aspect. Practices in regard to expenditure, taxation, and borrowing studied in problems of policy critically examined. Prerequisite: Social Science I and II or equivalent. Spring, 11:00, [Henry Calvert] Simons.
  1. International Economic Relations. – A survey of international economic relations with special emphasis on the theory of international trade and the economic foreign-policy of the United States. Are Prerequisite: Social Science I and II or equivalent. Winter, 11:00, [Harry David] Gideonse.

 

Source: University of Chicago Announcements. The College and the Divisions for the Sessions of 1934-1935. pp. 281-285.

Image Source:  Photo taken of Paul Samuelson and me at the Harvard Faculty Club following the memorial service for Abram Bergson in November 2003.

 

Categories
Courses Exam Questions M.I.T. Suggested Reading Syllabus

M.I.T. Intermediate Macroeconomics. Modigliani, 1961

Welcome to my blog, Economics in the Rear-View Mirror. If you find this posting interesting, here is the list of “artifacts” from the history of economics I have already assembled for you to sample or click on the search icon in the upper right to explore by name, university, or category. You can subscribe to my blog below.  There is also an opportunity to comment below….

______________________

These course materials for undergraduate intermediate macroeconomics at MIT in the Spring term of the 1960/61 academic year are clearly identified as being for a course taught by Franco Modigliani. As it happens from time to time, one finds syllabi and reading lists in the files of colleagues and not just in the papers of students who took the course or the professors who taught them. These materials from reading list through class-assignments, term-paper assignment, up to and including the final examination all come from Robert Solow’s papers at the Duke University library’s Economists’ Papers Project. 

___________________________________________

14.05 Economic Fluctuations and Growth

Prereq.: 14.02
Year: U(1,2)     3-0-5

Analytical study of determinants of national income level, employment, and prices; study of their fluctuations and long-run trends. Consideration of historical and current behavior of the economic system, and role of stabilization policies.

Modigliani

Source:   Massachusetts Institute of Technology Bulletin. The General Catalogue Issue for the Centennial Year 1960-61. p. 240.

 

___________________________________________

Spring, 1961
Professor Modigliani

 

14.05—Economic Fluctuations and Growth
READING LIST

 

Suggested Purchases: Dernburg & McDougall, Macro-Economics (1960)—(referred to below as D&M)
US Department of Commerce, U.S. Income and Output (1958)
Federal Reserve Chart Book, Historical Supplement (1960)

Review references in each section are to Samuelson, Economics (4th ed., 1958)

 

I. Introduction

Review: Samuelson, Ch. 1
New: D&M, Ch. 1

Friedman: Essays in Positive Economics, pp. 1-30.

II. National Income and Other Measures of Economic Activity.

Review: Samuelson, Ch. 10
New:   D&M, Ch. 1-5

Hart, Money, Debt, and Economic Activity (2nd ed., pp. 167-171)
G. Moore, Statistical Indicators of Cyclical Revivals and Recessions, pp. 1-20, 63-77
Survey of Current Business—“The Business Situation” in a recent issue, and look at annual review in February, 1960, number.

References: For current business conditions and course problems, get acquainted with the following, by examining thoroughly at least one recent issue:

Survey of Current Business (monthly; annual summary in February; National Income issue in July)
Federal Reserve Bulletin (monthly)
Economic Indicators (monthly; historical supplement, 1957)
See Bratt, Business Cycles and Forecasting (1953), Chapter 15, for additional source material

III. The Supply of Money and the Banking System.

Review: Samuelson, Chap. 15 and Appendix, 16.
New:   Hart, Money, Debt, etc., Ch. 4 and 6.

Federal Reserve System: Purposes and Functions

IV. The Determinants of the Level of National Income.

A. Monetary Approaches

Review: Samuelson, Ch. 14 and Appendix
New:   D&M, Ch. 9

Hart, Money, Debt, Ch. 10, 12

B. The Theory of Effective Demand

Review: Samuelson, Ch. 11, 12
New: D&M, Ch. 6, 7

Hart, Money, Debt, Ch. 11, pp. 167-179
(optional) Modigliani & Brumberg, “Utility Analysis and the Consumption Function”, in Post-Keynesian Economics (esp. pp. 388-418)
(optional) Ando, “Aggregative Implications of the Modigliani-Brumberg Consumption Function” (mimeographed), pp. 1-118 and Summary

V. Cyclical Fluctuations and Growth.

A. Nature and Causes of Economic Fluctuations

Review: Samuelson, Ch. 13
New: D&M, Ch 19, Section 1-3

Metzler, “The Nature and Stability of Inventory Cycles”, Review of Economics and Statistics, 1941-42
Modigliani, “Business Reasons for Holding Inventories and their Macro-economic Implications”, pp. 495-506
Modigliani, “Discussion of Hickman on Capacity, Capacity Utilization and the Acceleration Principle”, pp. 450-463 N.B.E.R. reprint
Cobren, “Inventories in Postwar Business Cycles”, Survey of Current Business, April, 1959
Tinbergen, The Dynamics of Business Cycles, Ch. 13
Hicks, Trade Cycle, Ch. 8, 9 (optional)
Fortune, series on the capital goods market in August, September, November, and December, 1958. (Sample, especially December issue.)

References only: Summaries of historical development of business cycle theories: Haberler, Prosperity and Depression, Part I.

B. Growth and its Interrelation with Cycles

D&M Ch. 16, 17
Abramovitz, Resource and Output Trends in the U.S. since 1870
(optional) Ando & Modigliani, “Growth Fluctuations and Stability”, AER, May 1959, pp. 501-524
Bratt, Business Cycles and Forecasting (1953 ed.), Ch. 3
“A New Look at Production Growth Rates”, in Survey of Current Business, April 1957
Fortune, “The Market of the 1960’s” (series of 9 articles, Jan.-Sept. 1959) (Sample, esp. April issue)
Committee for Economic Development, Economic Growth in the United States (hurriedly)

VI. Business Forecasting.

Charles Roos, “Survey of Economics Forecasting Techniques”, Econometrica, October 1955
Moore, Statistical Indicators of Cyclical Revivals and Recessions, pp. 63-77 (National Bureau of Economic Research Method)
Moore, Measuring Recessions, esp. pp. 259-272
Sidney S. Alexander, “Rate of Change Approaches to Forecasting—Diffusion Indexes and First Differences”, The Economic Journal, June 1958
Fortune, “The Business Roundup”, January 1960
“1959 Survey of Consumer Finances”, Federal Reserve Bulletin, July and September 1959 (note supplementary tables)
Klein & Lansing, “Decisions to Purchase Consumer Durable Goods”, Journal of Marketing, October 1955
Fortune, series cited above on “The Market of the 1960’s” and on “The Coming Capital Goods Boom”
Modigliani & Weingartner, “Forecasting Uses of Anticipatory Data on Investment and Sales”
Bassie, Economic Forecasting (good general reference)
Abramson and Mack, Business Forecasting in Practice (for reference)

VII. Public Policy and Economic Stabilization.

A. Synthesis of Monetary and Income Analysis

Review: Samuelson, Ch. 17
New: D&M, Ch. 8, 9, 10

B. Monetary Policy

D&M, Ch. 11
United States Monetary Policy (American Assembly) –(esp. Ch. 1, 2, 4, 6)
Friedman, “The Supply of Money and Changes in Output”, in The Relationship of Prices to Economic Stability and Growth (Joint Econ. Committee)
Bach, “The Economics and Politics of Money”, Harvard Business Review 1953 (reprint)
Committee on the Economic Report (Patman Subcommittee)—Replies pp. 368-384, 402-428 (for reference)

C. Fiscal and Debt Policy

Review: Samuelson, Ch. 18
New:   D&M, Ch. 20, 21

The Federal Budget in Brief for Fiscal 1961 (get acquainted; copy of complete budget also on reserve)
Committee on Economic Development, Taxes and the Budget; also reprinted in Readings in Fiscal Policy (Parts I and II only)
Committee on Economic Development, The Budget and Economic Growth
Samuelson, “The New Look in Tax and Fiscal Policy”, in Federal Tax Policy for Economic Growth and Stability, pp. 229-34
Butters, “Taxation, Incentives, and Financial Capacity”, in Readings in Fiscal Policy
McCracken, “The Debt Problem and Economic Growth”, Michigan Business Review, November 1956

D. Wages, Productivity, Prices, and Inflation

D&M, Ch. 12, 14, 18
Wages, Prices, Profits and Productivity, American Assembly, (esp. Ch. 1, 3, 4, 6)

E. Overall Stabilization Policy and Economic Growth.

Friedman, “Framework for Monetary-Fiscal Stability”, Readings in Monetary Theory, OR;
Bach, “Monetary-Fiscal Policy Reconsidered”, Readings in Fiscal Policy
Rockefeller Committee, The Challenge to America
C. E. D. Defense Against Inflation, July 1958
Eckstein, “Inflation, the Wage-Price Spiral, and Economic Growth”, in The Relationship of Prices to Economic Stability and Growth (Joint Economic Committee)
Bach, Inflation, Ch. 2, 4
Samuelson and Solow, “Analytical Aspects of Anti-Inflation Policy”, AER May 1959 (reprint)

VIII. International Aspects.

Review: Samuelson, Ch. 31 and Appendix
New:   D&M, Ch. 15

___________________________________________

 

Spring 1961
Professor Modigliani

14.05 – Economic Fluctuations and Growth
GUIDE SHEET TO BASIC ECONOMIC DATA SOURCES.

BASIC HISTORICAL INFORMATION:

Historical Statistics of the United States Colonial Times to 1952 (U. S. Government Printing Office) – Data on all major economic and many social areas, with descriptions of series.

U. S. Income and Output – A Supplement to the Survey of Current Business, providing data of all components of gross national product, 1929-1957.

Banking and Monetary Statistics, 1860-1941 (Board of Governors, Federal Reserve System)-More detailed series on money and banking, with descriptions of series.

The Economic Almanac (published annually by the National Industrial Conference Board) – each issue repeats large amount of historical data, some back to 1790. Several of these series go back further than the official government series; as such, they are often less accurate because of the less adequate coverage of the series and larger likely estimating errors involved.

(U. S. Census (U. S. Government Printing Office) – Vast amounts of data on most aspects of the economic life of business and individual, reaching back to 1790. Difficult to use without assistance or experience.

CURRENT DATA – OFFICIAL SOURCES

Survey of Current Business (U. S. Department of Commerce, monthly) – The most complete source of basic economic data, plus objective analyses of various economic developments. An annual survey is published each year in the February issue, and Annual Statistical Supplements have been issued in several recent years, which provide the data in more easily usable form than do most of the monthly issues.*

Federal Reserve Bulletin (Board of Governors, Federal Reserve System, monthly) – The basic source of current official monetary and banking data, plus monthly analyses of monetary developments.

Monthly Labor Review (U. S. Department of Labor) – The basic source of current official data on labor and on price movements, plus monthly analyses of developments in these areas.

Statistical Abstract of the U. S. (U. S. Government Printing Office, annually) – The basic annual compilation of all U. S. Government statistical data; corresponds to the Historical Statistics of the United States, above.

*Business Statistics, 1959 Biennial Edition – The latest major supplement to the Survey. It includes all major series published in the Survey, from 1929 through 1958 in most cases.

CURRENT DATA AND ANALYSES—UNOFFICIAL

There are a vast number of analyses of current economic developments published. Among the more widely recognized as careful and influential are:

Monthly Letter of the National City Bank of New York – General business conditions and financial conditions.

Fortune Magazine (monthly) – Current business analyses and industry studies, written from a relatively “liberal” business slant.

The Conference Board Business Record (National Industrial Conference Board, monthly) – Briefly analyzes current developments; more conservative than Fortune.

CURRENT EVENTS—NEWSPAPERS

Three newspapers are widely thought to provide the most complete coverage of current economic events. They are:

New York Times (daily and Sunday) – Provides the most complete coverage of current economic events.

New York Herald-Tribune (daily and Sunday) – The Times’ closest rival.

Wall Street Journal (daily) – Leading financial and business paper. Complete daily data on most important markets; also includes many speculative news stories and analyses of current and expected developments.

___________________________________________

Spring, 1961
Professor Modigliani

14.05-Economic Fluctuations and Growth
WRITTEN ASSIGNMENTS

I. Due Monday, February 13

“Inflation erodes the purchasing power of the dollar, robs the average man, and lowers the national standard of living. These results are pernicious and disastrous. Inflation must be avoided.” (Excerpt from recent statement by U. S. Senator)

Do you agree with the Senator? Why or why not?

 

II. Due Friday, September 17

Prepare a brief report (two to three pages) on the current business conditions and the outlook for the next six to twelve months.

___________________________________________

Spring, 1961
Professor Modigliani

14.05-Economic Fluctuations and Growth
WRITTEN ASSIGNMENT

III. Due February 24

Economists as well as politicians are very much concerned with the overall burden of taxes, or share of the nation’s income taxed away by the government.

Using as a framework for National Income Accounts of the Department of Commerce, state and defend what seems to you the most useful and meaningful measure of the “share of the nation’s income taken by the government” (paying attention to the numerator as well as to the denominator). Compute this year for 1948 and 1957.

Is the above concept identical with the “share of the nation’s output of goods and services consumed by the government”? If not, define the second concept and measure this year for the same two years.

Include any comments that may be suggested by your empirical findings.

___________________________________________

Spring, 1961
Professor Modigliani

14.05-Economic Fluctuations and Growth
WRITTEN ASSIGNMENT

IV. Due March 6

In a small, completely isolated economy (i.e., no foreign trade with money-using habits comparable to those of the U. S., there are four identical banks. Each bank’s balance sheet is as follows:

Cash $3,000,000 Deposits $8,000,000
Loans 2,000,000
Government Securities 5,000,000 Capital and Surplus 2,000,000
$10,000,000 $10,000,000

The law prescribes that banks must hold a 20% cash reserve against deposits. There is no central bank.

(a) A customer of bank letter a minds $1 million of gold (considered as cash for reserve purposes) and deposits it in his bank. Trace through any likely expansion of the money supply by Bank Letter a and by the entire banking system. What would be the maximum expansion possible?
Specify clearly any assumptions that you make, and state your reasoning carefully and precisely.

(b) Is the banking system in a more or less sound position after the gold deposit in any consequences you have predicted above? Explain why or why not.

___________________________________________

Spring, 1961
Professor Modigliani

14.05-Economic Fluctuations and Growth
WRITTEN ASSIGNMENT

V. Due March 10

In 196X the Federal Government will collect about 85 billion in taxes, according to present estimates, which also indicate that the money will be used roughly as follows:

Regular government expenses $77 billion
Repayment of government debt
…..Held by commercial banks 3 billion
…..Held by individuals and businesses other than banks 5 billion

Suppose these estimates are accurate, and assume it Government deposits are carried out with the commercial banks.

a. What will be the effect of these operations on the amount of money (current and deposits) owned by the public (including individuals and businesses other than banks)?

b. What will be the effect on the amount of total liquid assets (money plus government securities) owned by the public?

c. How, if at all, would your answers to (a) and (b) have been different if:

(1) All bonds paid off had been owned by commercial banks.
(2) All months paid off had been owned by the Federal Reserve Banks.

d. What generalization, if any, can you draw from this reasoning as to the most effective means of retiring the government debt, if the main aim is to alleviate inflationary pressure.

Explained concisely the reasoning by which to obtain the answers given.

___________________________________________

14.05-Economic Fluctuations and Growth
TERM PAPER—DUE MAY 15, 1961

Write an essay on the postwar “creeping inflation” in the U.S. – Its nature, causes and possible remedies. The essay should review the major explanations that have been advanced (e.g. cost-push and demand-poll); assess their usefulness in the light of the empirical evidence; and provide a formulation of your own conclusions and the evidence which supports them. It should further examine the implications of your analysis with respect to the outlook for price stability in the years immediately ahead.

The following items have been placed on reserve in Dewey Library to serve as a starting point, you should feel free to trace and use other references.

Books

American Assembly, Wages, Productivity, Prices, and Inflation
American Assembly, Wages, Prices, Profits and Productivity
Bowen, W. G., The Wage–Price Issue

Pamphlets, Monographs, Periodicals, etc.

Bowen, W. G., “Wage Behavior in the Postwar Period”, monograph, Industrial Relations Section, Princeton University, 1960
Eckstein, O., “Inflation, the Wage-Price Spiral, and Economic Growth”, in The Relationship of Prices to Economic Stability and Growth (Joint Economic Committee)
Phelps, E. S., “A Test for the Presence of Cost Inflation in the United States, 1955-1957”, Yale Economic Essays, Spring 1961
Samuelson and Solow, “Analytical Aspects of Anti-Inflation Policy”, AER, May 1960
Schultze, C., “The Recent Inflation in the United States”, Study Paper No. 1, Joint Economic Committee, 1959
Selden, R., “Cost-Push Versus Demand-Pull”, JPE, February 1959

___________________________________________

Prof. Modigliani
May 24, 1961

 

14.05 – ECONOMIC FLUCTUATIONS AND GROWTH
Final Examination

Answer all Questions.

I. Indicate whether the following statements are true or false and give a brief explanation of your answer. Major weight attaches to the explanation. (5 points per question)

(a) The money supply can always be increased through the Federal Reserve open market purchases.

(b) The relation between the two main demand liabilities of the FRB, namely Federal Reserve notes and member bank deposits is determined primarily by reserve requirements.

(c) Inflation will tend to occur whenever the money supply rises faster than productivity.

(d) Liquidity preference helps to explain why the velocity of circulation tends to vary over the business cycle.

(e) If the rate of investment expenditure declines, the stock of capital goods in the economy declines.

(f) Built-in flexibility in fiscal policy means that the level of government expenditure should vary countercyclically.

(g) A high marginal tax rate has a stabilizing effect on the economy by reducing the marginal propensity to consume.

(h) The most important characteristic of a good leading indicator is that it should always turn ahead of general business conditions.

 

II. (20 points) Given the following information (in billions of dollars per year):

Full employment income (Yf) 300
Consumption expenditure 20 plus 80 percent of disposable income
Government purchase of goods and services 50
Government receipts 20 percent of national income (Y)
Transfer payments 10 plus 5 percent of the difference between Yf and Y
Net investment 22

(a) Calculate the equilibrium level of income implied by this information and explain carefully in what sense it is an “equilibrium” level.

(b) What rate of investment would be required to bring about full utilization of resources? What measures other than an increase in investment could be utilized to reach full employment?

 

III. (20 points) Define the following concepts:

(a) multiplier

(b) capital coefficient

(c) acceleration principle,

and explain their use in business cycle analysis.

 

IV. (20 points) Explain the functioning of monetary policy as a stabilization device, and analyze its strength and weaknesses.

 

Source: Duke University. Rosenstein Library. Robert Solow Papers. Box 68. Folders “Reading Lists”, “Assignments, home problems”, and “Exams, tests, quizzes”.

Categories
Courses Exam Questions Harvard Socialism Syllabus

Harvard. Economics of Socialism. Mason and Sweezy, 1938

Between one slice of two weeks of pre-Marxian socialism and a slice of two weeks of the economics of planning, Mason and Sweezy offered their students a full portion of Marxian economics with an added dash of Leninism. This posting provides the enrollment, syllabus and final examination questions for 1938. Future Nobel prize laureate James Tobin was a student in the course and he took excellent notes! Here  a link to the Economics of Socialism that Paul Sweezy taught by himself in 1940.

__________________________

Welcome to my blog, Economics in the Rear-View Mirror. If you find this posting interesting, here is the complete list of “artifacts” from the history of economics I have assembled for you to sample or click on the search icon in the upper right to explore by name, university, or category. You can subscribe to my blog below.  There is also an opportunity to comment following each posting….

__________________________

[Course Enrollment: Economics of Socialism]

[Economics] 11b 2hf. (formerly 7d). Professor Mason and Dr. P. M. Sweezy.—Economics of Socialism.

1 Graduate; 27 Seniors; 23 Juniors; 1 Sophomore: Total 52.

Source: Harvard University. Report of the President of Harvard and Reports of Departments for 1937-38, p. 85.

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ECONOMICS 11 b
Outline and Reading
1937 – 38

Week of
Feb. 7-12
Mason		 a.  Outline of Course
b.  Utopian and Scientific Socialism
c.  Nature of Socialism as Utopia
Feb. 14-19
Mason		 a.  Saint-Simon
b.  Fourier
c.  Robert Owen
Reading:

Engels, Anti-Dühring, Part III
Strachey, Theory and Practice of Socialism, Part III
Gide and Rist, History of Economic Doctrines, Book II,
Chs. 2 & 3
Feb. 21-26
Mason		 a.  Life and Works of Marx and Engels
b.  Dialectical materialism and
c.  Historical materialism
Reading:

Riazanov, Marx and Engels
Feb. 28-Mar. 5
Mason		 a.  Theory of Classes
b.  Theory of the State
c.  The State and Revolution
Reading:    Handbook of Marxism [Burns],

Ch. I (Communist Manifesto)
Ch. IV (Class Struggles in France),
Ch. V (18th Brumaire),
Ch. VII (Civil War in France),
Ch. XX (Introduction to the Critique of Political Economy)
Mar. 7-12
Mason		 a.  Theory of Value
b.  Theory of Value
c.  General Tendencies of Capitalist Development
Mar. 14-19
Mason		 a.  Concentration and Centralization of Capital
b.  Monopoly Problem in Capitalism
c.  According to Marx and Lenin
Mar. 21-26
Mason		 a.  Marxian and Modern Views on
b.  Wages and Technological Unemployment
c.  Marxian Theory of Crises
Mar. 28-Apr. 2
Sweezy		 a.  Marxian Theory of Crises
b.  Imperialism
c.  Imperialism
Reading:

Handbook of Marxism, Ch. XXI (Capital)
Capital, Vol. I, Part VII, Ch. XXV, Sections 1, 2, 3, 4
Lenin, Imperialism

VACATION
Apr. 11-16
Mason		 a.
b.  The Socialist Movement After Marx
c.
Apr. 18-23
Mason		 a.
b.  Marxian Schools of Thought

Reading:

Sidney Hook, Towards the Understanding of Karl Marx, Part I
Further assignment to be announced.
Apr. 25-May 7
Sweezy		 Two weeks to be devoted to the following topics:
1.  Marxian and Orthodox Economics
[Handwritten note:] Rev of Ec Studies June ‘35
2.  The Allocation of Resources in Socialist Society
Reading:

Lange, Marxian Economics and Modern Economic Theory                         [Handwritten note:] Rev of Ec Studies June ‘35
Hayek, Collectivist Economic Planning, Chs. I, III, V
Pigou, Socialism versus Capitalism

Reading Period:

Sidney and Beatrice Webb, Soviet Communism, Vol. II
Chs. VIII, IX
[Handwritten additions:]
Ch 6 Lippman

Oct. 36 Rev of Ec Studies—Lange—On the Economic Theory of Socialism—Taussig memorial—Sweezy—Economist in Socialist State.

_____________________________

 

1937-38
HARVARD UNIVERSITY
ECONOMICS 11b/2 

I

(About one hour)
Reading Period Question

  1. What features of the Russian economic system do you think could be adopted by a capitalist country? What features seem to you to be peculiarly the product of socialism and hence inapplicable under a capitalist system? 

II

Answer four questions

  1. “The most egregious error committed by the Marxist theorists is in misunderstanding and underrating the strength of the middle classes.” Discuss.

 

  1. What arguments does Mises use to support his claim that socialism is impossible? Do you agree with these arguments? State your reasons.

 

  1. Summarize the fundamentals of Lenin’s theory of imperialism. What do you regard as the particular merits or weaknesses of this theory?

 

  1. “To what extent is it true to say that the doctrine of the ‘withering away of the state’ implies anarchism as the ultimate goal of Marxian socialism?

 

  1. State and criticize the Marxian theory of value.

 

  1. Do you think that Marxists are justified in regarding crises and depressions as inevitable under capitalism? What grounds are there for believing that they might be eliminated under socialism?

 

Final. 1938

Source: Yale University Library, Manuscripts and Archives. James Tobin Papers, Box 6.

Image Source: Mason and Sweezy portraits from the Harvard Album 1939.

Categories
Chicago Exam Questions

Chicago. Exam questions for Oskar Lange’s Imperfect Competition Course, 1941 & 1944

Welcome to my blog, Economics in the Rear-View Mirror. If you find this posting interesting, here is the complete list of “artifacts” from the history of economics I have assembled for you to sample or click on the search icon in the upper right to explore by name, university, or category. You can subscribe to my blog below.  There is also an opportunity to comment following each posting….

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The economist Norman M. Kaplan’s papers includes the reading list, two exams, and over 200 pages of his clear and legible lecture notes from Oskar Lange’s graduate theory course on imperfect competition at the University of Chicago. I have already posted the reading list for the Autumn quarter of 1941. This posting consists of the course exam questions for both 1941 and 1944.

_________________________

The course description in the 1944-45 course announcements
[identical to course description in 1941-42 announcements]

  1. Imperfect Competition.—A study of price formation and production under various transitional forms between perfect competition and pure monopoly, such as monopolistic and monopsonistic competition, noncompeting groups, oligopoly and bilateral monopoly. The problem of equilibrium under such forms. Noncompeting groups and social structure. Application of the theory to the study of distribution of incomes, collective bargaining, excess capacity, price rigidity, and business cycles. Imperfect competition and economic policy. Prerequisite: Economics 209 or equivalent. Sum[mer] 2d hf 1st T and 1st hf 2d T [C. ½ C in 2d hf 1st T]: MWF 1-3; Autumn, TuThS 10; Lange.

Source: University of Chicago. Announcements of the College and the Divisions for the Sessions of 1941. Vol. XLIV, No. 8 (May 15, 1944), p. 275.

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ECONOMICS 307
Autumn, 1941

(Answer briefly)

I.

The following table shows the demand (sales) schedule and the total cost schedule from a monopolist producing a patented medicine:

Output
(in units)

 Price (per unit) at which
output can be sold
(in dollars)

Total cost
(in dollars)

0

 10

1000

100

 9

1200

200

 8

1400

300

 7

1600

400

 6

1800

500

 5

2000

600

 4

2200
  1. Calculate the total revenue in the marginal revenue schedules
  2. Calculate the marginal cost, average cost and average variable cost schedules. Indicate the fixed cost
  3. Find the most profitable output and price. Showed that it is not affected by a change in fixed cost
  4. Calculate the net profit.

 

II.

  1. Explain the conditions under which monopolistic and monopsonistic price discrimination is (a) possible, (b) advantageous to the firm
  2. Assuming that the firm finds it possible and advantageous to practice monopolistic or monopsonistic price discrimination, indicate the relationship between (in the case of monopoly) the prices charged in the different markets and the respective elasticities of demand, or (in the case of monopsony) between the prices paid in the different markets and the respective elasticities of supply
  3. What can be said about the social desirability of monopolistic price discrimination from the point of view of welfare economics?

 

III.

  1. Explain by means of a diagram the formation of the wage-rate under conditions of monopsony in the labor market. What is the relation of the wage rate to the value of the marginal product of labor?
  2. Explain and discuss critically the concepts of “monopolistic exploitation” and of “monopsonistic exploitation” of labor
  3. Give a diagrammatic account of the effects of trade-unionism (with uniform wage-rates) and of control of monopoly upon the demand for labor by a firm (or industry).
  4. Indicate on the diagram the wage-rate you would impose if you were a government arbitrator. Discussed her decision in terms of (a) the level of employment, (b) the principles of welfare economics, (c) social justice (indicate your criteria of “justice”).

 

IV.

  1. Discuss the fundamental difficulty of the theory of oligopoly and explain how it is solved in (a) Chamberlin’s theory of monopolistic competition, (b) on the basis of rules of group behavior endowed with the dignity of ethical norms
  2. Discuss the significance of the kinked demand curve sub (1b) with regard to (a) price rigidity, (b) the functional distribution of incomes

 

V.

Discuss by means of a diagram the case of “service competition” between oligopolistic firms bound by a price agreement. Show (a) how the output of a firm is determined in this case and (b) the difference between this case and that of atomistic competition.

 

_________________________

 

ECONOMICS 307
December, 1944

I.

Describe Chamberlin’s theory of monopolistic competition and explain:

  1. the “excess capacity” obtaining when the firm and the group are both in equilibrium; distinguish between short and long-period “excess capacity”; which of the two presents a waste of resources from the social point of view and why.
  2. What assumptions about other firms’ reactions are made in Chamberlin’s theory.
  3. What criticisms can be made of Chamberlin’s theory.

 

II.

  1. Explain by means of a diagram the formation of the wage-rate under conditions of monopsony in the labor market. What is the relation of the wage rate to the value of the marginal product of labor?
  2. Explain and discuss critically the concept of “monopolistic exploitation” and of “monopsonistic exploitation” of labor.
  3. Give a diagrammatic account of the effects of trade-unionism (with uniform wage-rates) upon the demand for labor by a firm (or industry).
  4. Indicate on the diagram the wage-rate you would impose if you were a government arbitrator. Discuss your decision in terms of (a) the level of employment, (b) the principles of welfare economics, (c) social justice. (indicate your criteria of “justice”).

 

III.

Explain the reasons which lead under oligopoly to formation of a conventional price and state:

  1. Why is the demand curve likely to have a “kink” at the level of the conventional price;
  2. What is the shape of the marginal revenue curve in this case;
  3. Within what limits will a shift of the marginal cost curve leave price and output unaffected (illustrated by diagram);
  4. What bearing has this upon the problem of trade-unionism and wage-fixing.

 

IV.

“Total output is maximized when the ratios of the marginal productivities of any two factors are the same in each industry.”

  1. Explain what is meant in this context by “total output being maximized.”
  2. Give a simple numerical illustration of the theorem.

 

Source: University of Chicago Archives. Norman M. Kaplan Papers, Box 2, Folder 7.

Image Source:  Oskar Lange monument at Wroclaw University of Economics. Wikimedia Commons.

Categories
Economists Exam Questions M.I.T.

MIT. Final Exam in Graduate Macro I. Stanley Fischer, 1975

Welcome to my blog, Economics in the Rear-View Mirror. If you find this posting interesting, here is the list of “artifacts” from the history of economics I have already assembled for you to sample or click on the search icon in the upper right to explore by name, university, or category. You can subscribe to my blog below.  There is also an opportunity to comment below….

______________________

Today another posting from the more recent history of economics for that professor who succeeded where others had failed before him, namely in first teaching me the economic intuition behind macroeconomic models, Stanley Fischer. While James Tobin had succeeded in convincing the undergraduate me of the utter importance of getting macroeconomic policy right, I was still much too immature to “receive wisdom” as a sophomore…but enough about me.

I thought of Stan Fisher this morning as I read his marvelous summary of his own 55 years of experience with macroeconomics.

I earlier posted Fischer’s reading list for his undergraduate course at the University of Chicago in 1973. Below is the exam from the first half-semester course in the required four quarter sequence in macroeconomics for the cohort that entered MIT in the Fall of 1974, the cohort that included Paul Krugman, Jeffrey Frankel, Francesco Giavazzi, Andrew Abel, Dick Startz, to name only a few, sandwiched between Olivier Blanchard’s and Ben Bernanke’s respective cohorts.

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Spring 1975

Final Exam 14.451

Stanley Fischer

Time available is two hours. Answer all questions. You have a choice on question 2.

  1. (50 points) it is sometimes asserted that the key to the effectiveness of monetary policy is the fixed nominal return on money. Suppose that means were devised of paying interest on money and that the nominal bond interest rate were fixed in an arbitrary level.
    1. Using any convenient variant of a three asset (money, bonds, capital) model, explain the determination of asset market equilibrium and then of the overall equilibrium of the economy, under the assumption of a fixed bond interest and a rate market-determined money interest rate. (Maintain this assumption here after.)
    2. Analyze the consequences of an open market purchase for the interest rate on money and other endogenous variables. What are the differences between your results and those in the more usual model in which the bond interest rate varies?
    3. Suppose a helicopter dropped bonds on the populace. What happens to the interest rate on money and other endogenous variables?
    4. What do you make of the assertion mentioned in the first sentence of this question in the light of your answers to (ii) and (iii) and/or in the light of any other relevant considerations?
    5. Extra credit (5 points max). Can you envision any type of institutional arrangements which make the premise of this question — fixed bond interest rate and market determined interest rate on money — empirically reasonable?

 

  1. Answer A or B (30 points each)

A.

  1. What theoretical reasons are there to assume the demand for money is a function of the interest rate?
  2. Why does it matter?
  3. Review relevant empirical evidence.
  4. Discuss any econometric difficulties of the empirical work.

 

B.

A household has the utility of wealth function

U(W) = W (b/2)W2.

Its initial wealth is W0.
It can hold in its portfolio a safe asset paying a safe rate of return of our rB in the risky asset paying rE+g, where rE is the expected return and sg2 is the variance of return.

    1. Derive demand functions as a function of rB, rE, sg2, and W0.
    2. Suppose that a tax on next period’s wealth is announced, at rate t, i.e. t% of wealth at the beginning of next period will be paid to the government. What effect does this have on the asset demands? Can you give an intuitive explanation?
    3. Suppose instead that positive returns on the risky assets are taxed at a rate t, but not negative returns. Thus if A2 is the holding of the risky asset, the tax is tA2(rE + g) if rE +g > 0 and zero otherwise. The return on the safe asset is not taxed. What effect does this have on asset demands?

 

  1. (20 points)
      1. Define free reserves.
      2. Define excess reserves.
      3. What effect would Federal Reserve System payment of interest on reserves held at FR banks have on the demand for reserves? (Use any appropriate model, and assumed the rate on reserves as fixed below the rate on short-term government securities and the discount rate.)
      4. What effect would these interest payments have on the money multiplier? (For simplicity, assume there is only one type of deposit in existence.)
      5. It is sometimes said that payment of interest on reserves would strengthen Fed control over the money stock. Can you justify or refute this view?

 

Source: Irwin Collier.

Image Source: MIT Museum.