Category: Johns Hopkins

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Exam Questions Johns Hopkins Undergraduate

Johns Hopkins. Exam questions for undergraduate principles of accounting. Cooper, 1937-1938

In the newspaper account of Howard Earl Cooper’s retirement, the Dean of the Johns Hopkins University Evening College, called him “certainly the Mr. Chips” of the cohort retiring in 1969, i.e. a professor who was loved more by his students than he apparently loved doing research. But he was apparently very much loved by his students and we all know just how fickle the reception of our own research can be. One presumes he left with overwhelming fond professional memories.

But we are here to capture the reality of economics education through the years and Cooper’s exam questions from 1937-38 provide us another archival observation.

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Howard Earl Cooper
Chronology of his life and career

1899. October 17. Born in Canon City, Colorado.

Served in an Army intelligence unit in World War I.

1922-26, 1927-28. Registrar, School of Commerce, Accounts and Finance at the University of Denver.

1923. B.C.S. from the University of Denver

1925. S.B. from the University of Denver.

1927. S.M. in banking from Columbia University.

1927-28. Assistant Professor of Accounting at the University of Denver.

1928. Appointed instructor of accounting at Johns Hopkins University.

1932. Ph.D. in Political Economy from Johns Hopkins. Dissertation: The Application of Standard Costs to Factory Overhead Expenses.

1942. Appointed associate professor of accounting.

1946. Appointed professor of accounting.

1951-1969. Associate Dean of McCoy College (earlier called the Hopkins Evening College and later called the School of Continuing Studies) of Johns Hopkins University.

1985. October 9. Died in Baltimore, Maryland.

Sources:

  • Annual Report of the President for 1931-32, p. 246. Johns Hopkins University Circular (September 1932).
  • Retirement announced in The Baltimore Sun, May 24, 1969, p. 10.
  • Obituary in The Baltimore Sun, November 3, 1985, p. 38.

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Howard E. Cooper Jr. Memorial Scholarship

Mary Cooper Evans established this fund in 1985 in honor of Dr. Howard E. Cooper Jr., professor emeritus and former associate dean of McCoy College, who taught at Johns Hopkins from 1928 until his retirement in 1964. This fund supports students majoring in business.

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Course Description
Principles of Accounting
1937-1938

11 B. Principles of Accounting. Dr. Cooper. Three hours weekly, through the year. M., T., F., 2 p.m. Gilman Hall 312.

A study is made of financial statements as the goals of accounting endeavor, of the analysis and recording of business facts in the accounting books and records, and of the methods of opening and closing the books for a single proprietorship, partnership and corporation as well as the use of controlling accounts, and consignment accounts. Many practical problems are assigned to give facility in the handling of accounting records and a ready appreciation of their significance.

Prerequisite: Political Economy 1 C.

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Semester Examinations
Principles of Accounting
1937-1938

THE JOHNS HOPKINS UNIVERSITY
MID-YEAR EXAMINATION
POLITICAL ECONOMY 11 B

Dr. Cooper

February 2, 1938

Please write your answers to these questions legibly and in ink.

  1. (a) What is the purpose of classifying the items in a Balance Sheet?
    (b) What is the purpose of classifying the items in a Profit and Loss Statement?
    (10 points)
  2. (a) What is a trial balance?
    (b) What function does a trial balance serve?
    (10 points)
  3. Set up a schedule of debit and credit showing what kinds of items are to be debited and credited.
    (10 points)
  4. (a) What is the purpose of subdividing the journal?
    (b) What is the purpose of subdividing the ledger?
    (10 points)
  5. (a) What is a controlling account?
    (b) How would you account for the withdrawal of stock in trade by the proprietor in a set of books which had a sales and purchase journal and general journal and a subsidiary accounts receivable ledger?
    (10 points)
  6. From the following information prepare a worksheet.
Advertising $ 6,000 Miscellaneous Selling Expense $ 1,700
Accounts Payable 20,000 Notes Payable 25,000
Accounts Receivable 28,000 Motes Receivable 12,000
Bonds (Investments) 2,000 Purchases 128,000
Buildings 24,000 Purchase Discounts 2,400
Cash 14,000 Reserve for Bad Debts 700
Delivery Equipment 1,900 Returned Pur. and Allowances 4,000
Freight In 1,000 Returned Sales and Allow. 1,600
Furniture and Fixtures 5,800 L. A. Roberts, Capital 68,940
General Expense 5,600 L. A, Roberts, Per. (debit) 8,000
General Salaries 4,000 Sales 178,350
Insurance Expense 1,200 Salesmen’s Salaries 11,000
Interest Expense 1,000 Sales Discounts 680
Land 12,000 Store Equipment 3,000
Merchandise Inventory 24,000 Taxes 2,910
Depreciation on Buildings 5%.
Depreciation on Del. Equip. $720.
Depreciation on Furniture and Fixtures $800.
Depreciation on Store Equipment $400.
Bad Debts $1,760.
Prepaid Advertising $2,000.
Prepaid Insurance $200.
Accrued General Salaries $100.
Interest Accrued on Notes Payable $700.
Accrued Salesmen’s Salaries $350.
Accrued Taxes $300.
Deferred Income-Liability for Gift Certificates $750.
Accrued Interest on Bonds $60.
Accrued Interest on Notes Receivable $300.
Final Inventory $21,000

(50 points)

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THE JOHNS HOPKINS UNIVERSITY
FINAL EXAMINATION
POLITICAL ECONOMY 11 B

June 2, 1938
1 p.m.

Please use ink and write clearly.

  1. Pic and Pat are partners with capital accounts of $15,000 and $20,000 respectively. Business has not been good. Their assets are converted into $30,000 cash. There are liabilities of $8,000. Set up T accounts and show how the business should be dissolved.
  2. Bergen and McCarthy were engaged in a partnership with capital investments of $10,000 and $20,000 respectively. They decide to admit Lamour into the partnership for a one third interest for an investment of $20,000 in the partnership. Set up T accounts illustrating the admission of the new partner.
  3. Benny and Allen are partners with investments of $10,000 and $25,000 respectively. Their profit and loss sharing ratio is 2 and 3 respectively. Benny is to be allowed a salary of $3,000. Allen receives no salary. Each are to be allowed interest of 6% on their investments. The profits for the year are $4,500. How should they be distributed.
  4. The Baker Corporation is organized under the laws of the State of Maryland with an authorized Capital stock of 10,000 shares with a per value of $100 each. On April 1, 1938 the stock was sold at 90. On April 15, 10% of the stock was donated back to the company and on the 20th was resold for 80. Journalize the above data.
  5. On January 1, 1937 the Vallee Corporation issues $500,000 worth of 5% bonds at 95. Coupons payable on June 30 and December 31. These bonds have ten years to run. Show journal entries for:
    (a) Issuing the bonds
    (b) Payment of interest on June 30 and December 31.
    (c) Ammortizing the discount as of December 31 on a straight line basis.
  6. Set up a cost of goods sold section of a profit and loss statement of a manufacturing company supported by a schedule of the cost to manufacture using your own figures.
  7. What are the advantages and disadvantages in the use of a voucher system?
  8. How would you calculate an open to buy estimate? Illustrate.
  9. Illustrate two methods of accounting for consignments out.
  10. Illustrate the accounting for neglected purchase discounts.

Source: Johns Hopkins University, Eisenhower Library. Ferdinand Hamburger, Jr. Archives. Department of Political Economy. Curricular Materials. Series 6. Box 2. Folder “Department of Political Economy — Exams, 1936-1940”.

Image Source: Portrait of Howard Earl Cooper in the 1940 Johns Hopkins’ yearbook Hullabaloo, p. 9. Colorized by Economics in the Rear-view Mirror.

Categories
Exam Questions Finance Johns Hopkins

Johns Hopkins. Final examinations for Corporation Finance and Investments. Evans, 1937-1938

 

Associate Professor George Heberton Evans, Jr. taught the undergraduate course in corporation finance and investments at Johns Hopkins in the 1937-1938 academic year. Economics in the Rear-view Mirror has already posted some background information about him: Ph.D. from Johns Hopkins University, 1925. 

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 Course Description

6 B. Corporation Finance and Investments. Associate Professor Evans. Three hours weekly, through the year. Th., F., S., 10.30. Gilman Hall 314.

In the first part of this course the theory and practice of corporation finance will be considered with particular reference to the problems presented in the United States. The more important topics taken up include: advantages and disadvantages of corporate organization; classification and examination of the characteristics of stocks and bonds; the choice of different types of securities to be issued; methods by which these securities are floated; the methods and forms of syndicate underwriting; policy with reference to dividends and surplus; refunding of debt and provisions for amortization; receivership and reorganization.

The second part of the course will be devoted to the study of investments. The more important topics covered include: an analysis of the essentials of a good investment; an historical study of the rate of interest and of periodic fluctuations in the rate; definition of the essential legal characteristics of the various debt instruments and especially of the mortgage; historical and analytical description of the more important forms of investment, such as Government, State and municipal bonds, securities of private corporations, and real estate mortgages; theories of valuation and amortization.

Prerequisites: Political Economy 1 C, 2 C and 11 B.

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Course Examinations

THE JOHNS HOPKINS UNIVERSITY
MID-YEAR EXAMINATION
POLITICAL ECONOMY 6 B

Dr. Evans

February 4, 1938
9 a.m.

  1. Discuss the risks peculiar to the ownership of holding company securities.
  2. Discuss the trust as a method for effecting combination.
  3. What is the law of balanced return and how is it employed in corporation finance?
  4. What factors determine how much of a corporation’s earnings should be distributed to the stockholders?
  5. List the factors which are to be considered when drawing up a financial plan. Comment at some length upon two of the factors which you have listed.
  6. What is meant by trading on the equity? What principles may be set forth concerning trading on the equity?
  7. What is the chief advantage of the corporate form of enterprise?
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THE JOHNS HOPKINS UNIVERSITY
FINAL EXAMINATION
IN
POLITICAL ECONOMY 6 B

Dr. Evans

May 31, 1938
1 p.m.

  1. What advantages arise out of timing bond investments? Answer in terms of the concepts employed in the course.
  2. When can an investor afford to overlook the possibility that a loan will not be paid at maturity? Discuss fully.
  3. What has been the relationship between the changes in the prices of goods and capital? How do you explain the relationship?
  4. When are the market forecasts of the probabilities with respect to the payment of principal and interest of bonds more likely to be consistent with the results?
  5. Discuss the investment trust or company as an investment mechanism.
  6. What seems to you to be the prospect with respect to the rate of interest? Give the bases for your opinion.

Source: Johns Hopkins University, Eisenhower Library. Ferdinand Hamburger, Jr. Archives. Department of Political Economy. Curricular Materials. Series 6. Box 2. Folder “Department of Political Economy — Exams, 1936-1940”.

Image Source: Johns Hopkins University, Sheridan Libraries, Graphic and Pictorial Collection. George Heberton Evans at approximately 40 years old. The portrait was colorized by Economics in the Rear-view Mirror.

Categories
Exam Questions Johns Hopkins Money and Banking

Johns Hopkins. Final exams for undergraduate money and banking. Weyforth, 1937-1938

 

Brief biographical information William Oswald Weyforth can be found in the earlier post that has includes the 1930-31 exam questions in money and banking.

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Course Description
for Money and Banking
1937-1938

3 B. Money and Banking. Associate Professor Weyforth. Three hours weekly through the year. M., Tu., W., 9.30. Gilman Hall 311.

In this course an analysis of the functions of money, credit and banking in our modern economic life will be made. There will be a description of various types of monetary systems, of the forms of credit and of banking and financial institutions. Particular attention will be given to the relationship between money, bank credit and prices; to the effects of price fluctuations upon individuals and upon general business conditions; to the problems of stabilizing prices and controlling business fluctuations by means of a deliberately directed monetary and credit policy. The Federal Reserve System will be studied with special emphasis upon its problem of credit control. Some time will also be devoted to the relationship between the money market and the stock market, to the problem of brokers’ loans, and to financial operations involved in our international trade.

Prerequisite: Political Economy 1 C.

Source: The Johns Hopkins University Circular (1937).

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Semester Examinations for Money and Banking
1937-1938

THE JOHNS HOPKINS UNIVERSITY
MID-YEAR EXAMINATION
POLITICAL ECONOMY 3 B
(Money & Banking)

February 1, 1938

  1. What are the essential features of a gold standard? Distinguish between a gold specie and a gold bullion standard. Is the United States on a gold standard at the present time? Give the reasons for your answer.
  2. What is bimetallism? What were the forces responsible for the demand for bimetallism after 1873. Criticize the recent silver policy of the United States government.
  3. Distinguish the international “balance of trade” and the “balance of payments” of any country. What are the more important types of transactions that enter into the balance of payments? Explain the forces through which equilibrium in the international balance of payments of a country is maintained under an international gold standard.
  4. When two countries are both on a gold standard why do market rates of exchange between the two currencies remain close to the mint par of exchange? Explain fully the circumstances under which bankers will undertake shipments of gold.
  5. Explain the relation between the quantity of money and the general level of prices. Will an increase in the quantity of money always result in an increase in the general level of prices? Explain fully.
  6. Explain the type of financing under which large government expenditures might lead to inflation. How might such expenditures be financed without bringing inflation?
  7. Explain the relationship between the purchasing power and the exchange rates of two currencies. Is the equilibrium rate between two paper currencies necessarily the purchasing power parity? Explain.
  8. Distinguish between a bill of exchange and a promissory note. Explain the significance of negotiability.
  9. Show how demand deposits in banks serve as money. Explain how banks create deposits. How is the power of banks limited in this respect? Explain the difference between the power of the banking system as a whole and that of a single bank that is one among a number in the system.
  10. What is meant when it is said that the pound sterling was overvalued when England returned to the gold standard in 1925; and that the franc was undervalued when France returned to gold in 1928? What are the economic effects of a country’s overvaluation or undervaluation of its gold currency?

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THE JOHNS HOPKINS UNIVERSITY
FINAL EXAMINATION
IN
POLITICAL ECONOMY 3 B

Dr. Weyforth

May 31, 1938
9 a.m.

  1. What factors have been responsible for the decline of commercial loans in the United States since the end of the world war? What is the nature of the problem that this development has presented to commercial banks?
  2. In what way has speculation in securities been financed by commercial banks? Explain fully. What specific powers have been conferred upon the Federal Reserve Board by the Banking Act of 1933, and by the Securities and Exchange Act of 1934 so as to give the Board greater control over speculation in securities?
  3. What factors have been responsible for the large excess reserves of member banks during the depression? Why have these excess reserves not led to a commensurate expansion of loans and investments?
  4. What justification is there for saying that we have a managed currency in the United States at the present time?
  5. What methods may be employed by the Federal reserve system at the present time for the purpose of credit control? Distinguish between quantitative control and qualitative control.
  6. In determining its policy of credit control what consideration should be given by the Federal Reserve officials to the following factors: (a) the state of the gold (gold certificate) reserves of the Federal reserve banks; (b) the general level of commodity prices; (c) the movement of security prices; (d) the volume of employment?
  7. What are the limits of the effectiveness of easy credit conditions as a means of stimulating business activity during a depression? How effective do you believe that government spending may be for this purpose? Explain fully.
  8. State the arguments pro and con for branch banking in the United States.
  9. What is meant by sterilized gold in the United States Treasury? What was the mechanism by means of which this sterilization was accomplished.

Source: Johns Hopkins University, Eisenhower Library. Ferdinand Hamburger, Jr. Archives. Department of Political Economy. Curricular Materials. Series 6. Box 2. Folder “Department of Political Economy — Exams, 1936-1940”.

Image Source: William Oswald Weyforth (ca. 50 years of age). Johns Hopkins University graphic and pictorial collection, Sheridan Libraries. Colorized by Economics in the Rear-view Mirror.

Categories
Exam Questions Johns Hopkins Statistics

Johns Hopkins. Semester exams for statistics. Robert G. Deupree, 1937-1938

 

Following a brief chronology of the life and career of the Johns Hopkins political economy Ph.D. alumnus (1937) and lecturer on statistics in the department of political economy in 1937-38, Robert Gaston Deupree, this post contains the exam questions from his year-long undergraduate course in statistics.

Fun Fact.  His son, Robert Gaston Deupree, Jr. (b. 5 August 1946)  is a distinguished astrophysicist.

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Robert Gaston Deupree

1914. January 12. Born in Indianapolis, Indiana to Clarence Cecil and Edith (Gaston) Deupree. Father’s occupation “Banker” according to birth certificate.

1930. Graduated from Shortridge High School (Indianapolis).

1934. A.B. from Franklin College (Indiana).

1935. Employed in the Washington office of the National League of Wholesale Fresh Fruit and Vegetable Distributors.

1935. September 7. Married college sweetheart, Mildred Avery of Martinsville, Indiana in Washington, D.C.

1937. Ph.D. awarded by Johns Hopkins University. Dissertation: The wholesale marketing of fruits and vegetables in Baltimore (Johns Hopkins Studies in History and Political Science, Ser. LVII, No. 2).

1940. Employed by Baylor University (Waco-McLennan Texas) according to Selective Service Registration Card. Address in Silver Spring, Maryland.According to 1942 AEA list of members, associate professor.

1942. According to AEA list of members. Office of Price Administration, Chemical Branch.

1947. Joined the faculty of the University of Tennessee. Professor of statistics.

1963. Died November 12 after a brief illness at age 49 in Knoxville, Tennessee. At the time of his death he was the head of the University of Tennessee’s Department of General Business, College of Business Administration.

Sources:

  • “Franklin Graduates Wed,” The Indianapolis Star (14 September 1935, p. 5).
  • American Economic Association. 1942 List of Members.
  • “R.G. Deupree, Doctor, Dies,” The Indianapolis Star (14 November 1963, p. 33).
  • State of Tennessee, Department of Public Health. Certificate of Death for Robert Gaston Deupree, Sr.

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Course Description
Statistics, 1937-1938

2 C. Statistics. Mr. Deupree. Three hours weekly through the year. M., Tu., W., 10.30. Gilman Hall 314.

The first half of the course will include a brief history of statistics as a science, a discussion of the collection and presentation of statistical data, and a study of some simple tools of analysis.

During the second half-year various index numbers, such as those measuring the changes in wholesale prices, retail prices, cost of living, wages and production will be studied. Special attention will be given to the business cycle and the various statistical aids that have been developed for forecasting business conditions.

In order that the student may more clearly understand statistical methods, practical exercises are assigned to supplement the class-room discussions. This work will enable the student to become familiar with the principal sources of statistical information concerning economic and business problems.

Prerequisite: Mathematics 1 C or 2 C.

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End of semester examinations
Statistics, 1937-1938

THE JOHNS HOPKINS UNIVERSITY
MID-YEAR EXAMINATION
POLITICAL ECONOMY 2 C

Dr. Deupree

January 31, 1938

  1. Why should students of the social sciences possess a knowledge of statistical method?
  2. Name four men who contributed to the early development of Statistics and explain briefly how each contributed?
  3. Outline the manner in which you would set about collecting data regarding the retail prices of coffee in Baltimore as of a particular day, for example, February 1, 1938.
  4. (a) From the following information construct two decks of a ratio chart:

Log

 1=0
Log

1.25= .096910

Log

 1.75 = .243038
Log

2 = .301030

Log

3 = .477121

(b) Construct the supplementary scales to be used with this ratio chart. Explain how they are used.
(c) Plot on the chart:

1900

 2.5
1905

4

1910

 9
1915

45
  1. (a) What are crude ratios? Why do they need to be refined?
    (b) From the following figures calculate the crude labor turnover rate of each factory. Then using Factory A as standard, refine the labor turnover rate of Factory B for the 2 factors, color and age.

No. of workers

No. leaving employment
Factory A
Total

1,000

100
White 20-40

400

40
White 40+

300

9
Black 20-40

200

40
Black 40+

100

11
Factory B
Total

2,000

150
White 20-40

1,000

60
White 40+

700

42
Black 20-40

200

38
Black 40+

100

10

What do your results indicate?

  1. Define an average. With very simple illustrations show how the arithmetic mean, median, and mode conform to your definition.

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THE JOHNS HOPKINS UNIVERSITY
FINAL EXAMINATION
IN
POLITICAL ECONOMY 2 C

Dr. Deupree

May 30, 1938
9 a.m.

  1. Make a detailed outline for a chapter on Index Numbers for a statistics textbook.
  2. Compare the process of analyzing a static series with that of analyzing a time series.
  3. Define and indicate briefly the statistical uses of:
    1. Non-linear correlation
    2. Coefficient of skewness
    3. Deciles and Percentiles
    4. Symmetrical distribution
    5. Standard error of estimate
    6. Average deviation
    7. Probable error
    8. Net regression coefficients
    9. Multiple correlation
    10. Partial correlation
  4. Correlate the following data by simple linear correlation:

X

 Y

2

 1
2

2

3

 3
4

4
4

5

a. Construct a scatter diagram.
b. Find the predicting equation;
c. Calculate “r”.
d. Interpret your results.

Source: Johns Hopkins University, Eisenhower Library. Ferdinand Hamburger, Jr. Archives. Department of Political Economy. Curricular Materials. Series 6. Box 2. Folder “Department of Political Economy — Exams, 1936-1940”.

Image Source: Franklin College 1933 Yearbook portrait of Robert G. Deupree, colorized by Economics in the Rear-view Mirror.

Categories
Exam Questions Johns Hopkins Principles Undergraduate

Johns Hopkins. Exams for the five sections of principles of economics, 1937-1938

 

This post is the first of transcribed mid-year and end-year course examinations in political economy at Johns Hopkins University for the academic year 1937-1938. Principles of economics was taught in five sections: three for the College of Arts and Sciences, one for the School of Business Economics and one for the School of Engineering.

Related earlier material from Johns Hopkins:

Exams 1921-22;  Exams 1923-24; Exams 1932-33. 

A report of activities of the department of political economy for 1935-1936 has also been transcribed and posted earlier.

Blog News

Today’s post is the first content getting a toot at Economics in the Rear-view Mirror’s new outpost at Mastodon.

Twitter and Facebook outposts will continue announcing new content as well as occasional retweets, toots, shared-links and other such social stuff. Different strokes and all that jazz, but so far no requests for music or dance videos.

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Course Description

1 C. Elements of Economics. Three hours weekly through the year. Section 1: Dr. Bullock, Th., F., S., 8.30. Maryland Hall 110. Section 2: Associate Professor Mitchell, M., Tu., W., 8.30. Maryland Hall 110. Section 3: Associate Professor Weyforth, M. Tu., W., 11.30. Gilman Hall 314. Section 4: Dr. Cooper, M., Tu., W., 10.30. Gilman Hall 311. Section 5: Mr. Deupree, M., Tu., W., 8.30. Gilman Hall 314.

Note: Students in the School of Engineering will be assigned to Section 1; students in the School of Business Economics to Section 3; and students in the College of Arts and Sciences to Sections 2, 4, and 5.

This course teaches the elements of the science, aiming to show the principles upon which economic society is organized and operated. Particular attention is given to the theory of value and the theory of distribution together with their application to leading economic problems. Such subjects as Money and Banking, Rent, Wages, Interest, Profits, Industrial Combinations, International Trade, are treated in the course. It is part of the purpose of the course to indicate the application of scientific principles to current economic problems.

Required of all students before graduation.

Source: The Johns Hopkins University Circular (1937). Vol. LVI, No. 486 (April, p. 61).

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Elements of Economics
Mid-year and End-year Examinations
1937-1938

Elements of Economics. Section 1
Dr. Roy J. Bullock

THE JOHNS HOPKINS UNIVERSITY
MID-YEAR EXAMINATION
POLITICAL ECONOMY 1 C

Dr. Bullock

Wednesday
February 2, 1938, 9 a.m.

I.

Define or identify:

1. Property
2. Utility
3. Laissez-faire
4. Intensive margin of cultivation
5. Cumulative preferred stock
6. Time preference
7. Craft gild
8. Marginal revenue
9. Vertical combination
10. Demand

II.

What would be the difference between monopoly and competitive price under the following conditions:

    1. Elastic demand and increasing costs
    2. Elastic demand and rapidly decreasing costs
    3. Inelastic demand and increasing costs
    4. Inelastic demand and decreasing costs?

Illustrate each with a diagram.

III.

President Roosevelt has proposed a revision of the Federal Anti-Trust Laws. What reasons are there for being dissatisfied with our existing anti-trust laws? Are there any reasons for changing the objectives that have guided our anti-trust policy in the past? In what respects is the trust problem a price problem? Discuss.

IV.

Assume the following data with regard to a grain farm for the years 1930 and 1936:

1930 1936
Number of bushels produced 5,000 7,000
Total expenses of production $4,500 $8,000
Price of grain per bushel $.90 $1.30
Rate of return expected on farm investments 5% 4%
    1. What was the economic rent of this farm in 1930? in 1936? As a tenant what rent could you have afforded to pay in each year?
    2. Does the rent paid by the former have any effect on the price of grain at the primary market? Explain.
    3. As a buyer of land how much would you have been willing to pay for this farm in 1930? in 1936? Why?
    4. If grain alcohol became a commercial success as a substitute for gasoline, what would be the probable effect on the economic rent of this farm?

V.

Compare the advantages and disadvantages of the individual proprietorship, the corporation and the partnership from the point of view of the organizer of a business. Why has the corporation gained in relative importance during recent years?

THE JOHNS HOPKINS UNIVERSITY
FINAL EXAMINATION
POLITICAL ECONOMY 1 C

Dr. Bullock

Friday, June 3, 1938 – 9 a.m.

I

Explain briefly the meaning or significance of:

1. Legal tender
2. Favorable balance of trade
3. Interstate Commerce Act of 1887
4. American Federation of Labor
5. Fiat money
6. Stoppage at the source
7. Elastic currency
8. Committee for Industrial Organization
9. Taxation according to benefit
10. Workmen’s compensation law.

II

(a) Explain clearly how commercial banks are able to make loans greatly in excess of their cash resources.

(b) Explain the difference between the equation of exchange and the quantity theory of money.

III

A popular slogan of recent years has been, “More business in government, less government in business.” Developments have been in the opposite direction to that advocated. Have these developments been the result of party politics or are they in accord with underlying economic tendencies? Evaluate the slogan in the light of current conditions.

IV

Appraise national legislation to stablish a minimum weekly wage and a maximum number of hours work per week with regard to its probable effect on laborers income and on the business cycle.

V

(a) “The restoration of the pound sterling to its pre-war value was equivalent to the imposition of a heavy tax upon the British exporting industries.” Explain. Did the increase in the value of the pound make it easier or more difficult for other countries on the gold standard to sell in the British market? Explain.

(b) Explain and illustrate the difference between a tariff schedule designed as a revenue measure and a schedule aimed primarily at protection.

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Elements of Economics. Section 2
Associate Professor Broadus Mitchell

THE JOHNS HOPKINS UNIVERSITY
MID-YEAR EXAMINATION
Political Economy 1 C

[Monday, Jan. 31, 1938. 9 a.m. Dr. Mitchell]

  1. What is the general theory of the competitive economic system?
  2. (a) Show how prices are determined under conditions of competition.
    (b) What are some of the forces which, in fact, interfere with this perfect operation of competition?
  3. On what economic theory do inflationists rely? Explain this theory briefly.
  4. State and explain the marginal utility theory of value.
  5. Identify briefly: the Physiocrats, Colbert, Kirkcaldy, James Watt, P. S. DuPont, Salmon P. Chase, R. B. Taney, Friedrich Engels, holding company, consumer‘s surplus, elastic demand.
  6. (a) Discuss the chief means used in this country to cope with the problem of unemployment.
    (b) What is meant by “technological unemployment”?
  7. Explain the changes made in the Federal Reserve System as a result of the depression of 1929.

 

THE JOHNS HOPKINS UNIVERSITY
FINAL EXAMINATION
IN
POLITICAL ECONOMY 1 C

Dr. Mitchell

May 30, 1938
9 a.m.

  1. (a) Give the purposes, structure, and method of operation of the Federal Reserve System.
    (b) Why, in your opinion, did it fail to prevent the depression of 1929 and the subsequent closing of the banks of the country?
  2. (a) Explain the differential or Ricardian theory of rent.
    (b) What were the influences responsible for Henry George’s book, Progress and Poverty?
    (c) What is the Socialist’s criticism of the single tax proposal?
  3. State and discuss the Wage Fund Theory and the Exploitation theory of wages.
  4. (a) How do pure profits arise?
    (b) What developments in American economic life appear to make our old reliance upon the profit motive inappropriate now?
  5. In what sense is it true that the cost known as interest would be present even in a collectivist economy?
  6. What forces are responsible for the present increased demand for industrial unionism as against craft unionism in the United States?
  7. Contrast the teachings of Robert Owen with those of Karl Marx.

*  *  *  *  *  *  *  *  *  *  *  *

Elements of Economics. Section 3
Assoc. Professor William O. Weyforth

THE JOHNS HOPKINS UNIVERSITY
MID-YEAR EXAMINATION
POLITICAL ECONOMY 1 C

Dr. Weyforth

February 3, 1938
9 a.m.

  1. What is meant by the doctrine of “laissez faire”? That were the conditions under which the doctrine was developed? Explain the arguments in favor of the doctrine, and the factors responsible for a departure from the doctrine in recent years.
  2. What are the essential features of the corporation as a form of business organization? How do you account for the rise of the corporate form of business organization in recent years? Distinguish the following: common stock, preferred stock, bonds.
  3. What are the “factors of production” and the “agents of production”? What is meant by the “best combination of the agents of production” as applied to any business enterprise. Distinguish between the average total unit cost of production and the marginal cost of production. Illustrate by diagram.
  4. Explain what is meant by an individual demand schedule for any commodity. Show the relationship between such a demand schedule and the theory of marginal utility. Upon what principles does a consumer tend to divide his expenditures among different commodities? How is the total demand schedule in any market for a certain commodity related to the individual demand schedules?
  5. Show how the market price is determined by supply and demand under conditions of competition. Show how an increase in supply, demand remaining constant, will lead to a decline in price. Would the decline in price be greater where the demand is elastic or inelastic? Explain the problem by the use of diagrams.
  6. In what way is the monopolist able to control price? What is the theory of monopoly price? Explain the statement that the monopolist will tend to fix the price at the point where the marginal revenue curve intersects the marginal cost curve.
  7. What is meant by monopolistic competition? State some of the circumstances under which it tends to appear. Explain the difference in the shape of the demand curve for the product of an individual producer under conditions of pure competition and those of monopolistic competition.
  8. Explain the distinction between industries of constant cost, increasing cost, and decreasing cost. What are the factors primarily responsible for these differences, that is, under what circumstances are we likely to have each type of industry? How can we have an industry of increasing cost and at the same time constant or falling prices for the product of that industry over a period of years.
THE JOHNS HOPKINS UNIVERSITY
FINAL EXAMINATION
POLITICAL ECONOMY 1 C

Dr. Weyforth

June 2, 1938
9 a.m.

  1. In the regulation of public utilities, what are the important economic problems involved in the determination of a fair price to be charged for the services rendered?
  2. Show how bank deposits subject to check serve as a medium of exchange. Explain how the volume of such deposits may be affected by the loan and investment policies of banks.
  3. What are business cycles? Explain the theory that fluctuations in general business activity are due primarily to fluctuations in the volume of investment. What are the possibilities of public spending as a means of remedying business depression?
  4. Explain the theory that under conditions of competition the rate of wages in any occupation tends to correspond to the marginal productivity of labor in that occupation. According to this theory how do you explain the relatively higher wages paid to skilled workers as compared with unskilled workers?
  5. Explain how, other things being equal, the growth of population will affect the rent of land. How is this explanation related to Henry George’s proposal. for a single tax on land?
  6. Show how interest rates are determined by the supply of and the demand for loanable funds. What are the sources of the supply of and demand for loanable funds? How may banking policy affect interest rates? What are the limits of banking policy in this respect?
  7. What are the factors that give rise to profits? What functions do profits perform in an economic system of free enterprise?
  8. What are the characteristic features of capitalism? What do you mean by socialism? by communism? What is “utopian” socialism? “scientific socialism”?
  9. Explain the law of comparative cost as applied to international trade.

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

Elements of Economics. Section 4
Dr. Howard E. Cooper

THE JOHNS HOPKINS UMIVERSITY
MID-YEAR EXAMINATION
POLITICAL ECONOMY 1 C

[Dr. Cooper]

January 31, 1938
9 a.m.

Please write your answers to these questions legibly and in ink.

  1. “The Production of wealth may take the form of the creation of form utility, of place utility, or of time utility.”
    Explain and give examples of each.
  2. What would be the effect on our industrial system of too much saving, of too little saving?
  3. “The division of labor promotes production by economizing labor, increasing its efficiency, and making more effective use of capital.” This is all helpful from the point of view of capital. How about the laborer?
  4. What is the concept of marginal utility?
  5. What are some examples of elastic demand?
    What are some examples of elastic supply?
  6. Distinguish between increasing costs and decreasing costs.
  7. What is the meaning of imperfect competition?
  8. What are some of the limitations on monopoly price?
  9. Suppose the quantity of money held by everyone were to be doubled. Would we be twice as wealthy? Explain.
  10. Discuss briefly some of the factors which influence the rate of interest.
THE JOHNS HOPKINS UNIVERSITY
FINAL EXAMINATION
IN
POLITICAL ECONOMY 1 C

Dr. Cooper

Monday [May] 30, 1938
9 A.M.

Please use ink and write clearly.

  1. In what ways does the Federal Reserve System seek to control credit?
  2. (a) What is the significance of the double budget made use of by President Roosevelt?
    (b) Trace briefly the National Debt of the United States?
  3. (a) What is meant by combining business risks to prevent their harmful effects? Illustrate.
    (b) What is meant by passing risks to the shoulders of others more able or willing to bear them? Illustrate.
  4. Define the following:
    (a) a pool
    (b) a trust
    (c) a holding company
    (d) a consolidation
    (e) a merger.
  5. The newspapers frequently carry statements to the effect that local patriotism requires that you patronize local merchants and industries in order to keep money at home. Criticize.
  6. What factors lead to fluctuations in foreign exchange?
  7. Would you advocate an early return to the gold standard? Give reasons for and against.
  8. Discuss briefly the factors affecting the supply and demand for labor.
  9. Distinguish between the craft or trade union, and the industrial union. Which do you think will be the union of the future? Why?
  10. Marx held that the tendency toward concentration, and the increasing numbers and misery of the laboring class would lead us into Socialism. Taking into consideration the long time period, is it possible that he was right?

*  *  *  *  *  *  *  *  *  *  *  *

Elements of Economics. Section 5
Dr. Robert G. Deupree

THE JOHNS HOPKINS UNIVERSITY
MID-YEAR EXAMINATION
POLITICAL ECONOMY 1 C

Dr. Deupree

February 1, 1938
1 p.m.

  1. Define: wealth, utility, income, capital, functional distribution.
  2. Contrast: the manorial system, guild system, and domestic system.
  3. Distinguish between the following forms of the business unit: Individual proprietorship, partnership, limited partnership, and corporation.
  4. Discuss the economic effects of division of labor.
  5. Explain the marginal utility concept.
    How does it relate to price?
    Explain marginal cost of production.
    How does it relate to price?
  6. Distinguish between production under conditions of increasing, decreasing, and constant costs, giving examples of each.
  7. A monopolist finds the following cost and demand schedules prevailing in the market for his commodity:
Quantity Cost per unit Selling price per unit
1,000,000 1.00 1.00
750,000 1.07 1.10
500,000 1.36 1.40
250,000 1.49 1.50

What would be the monopoly price in this market? Why? Are there any limitations upon the monopolists’ power to fix price? Explain.

  1. Show how economic rent arises on urban lands. Does the law of diminishing returns apply to urban lands? If so, in what manner? Explain what is meant by the extensive and intensive margins of cultivation in agriculture and their relation to economic rent.
  2. What is the time preference theory of interest?
    How would the rate of time preference be affected by:
  1. a steady growth of the national income?
  2. extravagance in consumption?
  3. old age pensions paid by the government?
THE JOHNS HOPKINS UNIVERSITY
FINAL EXAMINATION
POLITICAL ECONOMY 1 C

Dr. Deupree

June 1, 1938
9 a.m.

  1. Identify or define:
    1. Karl Marx
    2. Thomas Malthus
    3. Gresham’s law
    4. Knights of Labor
    5. Rochdale system
    6. Law of large numbers
    7. Hedging
    8. Processing taxes
    9. Gold export point
    10. Mint par of exchange.
  2. a. Discuss money.
    b. Define a commercial bank and discuss its functions.
    c. Define a central bank and discuss its functions.
  3. Summarize the major provisions of and evaluate any two of the following:
    a. Banking Act of 1935
    b. Social Security Act
    c. Trade Agreements Act
    d. National Labor Relations Act
    e. National Industrial Recovery Act
    f. Clayton Anti-trust Act
  4. a. Sketch the basis of the conflict between the American Federation of Labor and the Committee for Industrial Organization. Discuss the relative merits of the arguments.
    b. How would you account for the wages paid a particular group of workers — for example, carpenters in Baltimore?
  5. a. What are the basic Socialist proposals?
    b. Distinguish: Socialism, Communism, Fascism.
  6. How would you meet the unemployment problem in the United States? Give reasons for each step you propose.

Source: Johns Hopkins University, Eisenhower Library. Ferdinand Hamburger, Jr. Archives. Department of Political Economy. Curricular Materials. Series 6. Box 2. Folder “Department of Political Economy — Exams, 1936-1940”.

Categories
Exam Questions Johns Hopkins

Johns Hopkins. Comprehensive Exams for Economics Ph.D. 1961

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

 

A memorandum written by Richard Musgrave to his economics department colleagues at Johns Hopkins University in October 1960 was transcribed for the previous post. He made a few proposals for a modest change in the first and second year general examinations for graduate students. This post provides transcriptions of six prelim examinations given in April 1961 found in the departmental files: microeconomic theory, macroeconomic theory, theory of international trade, public finance, economic history and monetary theory and policy. As there are neither statistics/econometrics nor history of economics questions, I strongly suspect that the following exams represent at best a significant subset of the exams from April 1961.

Earlier post with the ten exams from 1965.

________________________________

EXAMINATION
MICROTHEORY

April 24, 1961

Answer one question from each group

Group I

  1. (a) It is sometimes said that “distribution costs too much”. What is a meaningful theoretical interpretation of the assertion?

(b) Suppose you were to set out to investigate the charge empirically. What sort of data would you want to collect? How would you use these data to shed light on the question?

  1. Each year, the International Whaling Commission estimates the number of whales which may be taken in international waters without endangering the long-run supply of whales. When this limit is approached, a date is set after which no further whaling is allowed for that year.
    For purposes of this question, make the following assumptions: (1) all ships engaged in whaling abide by the decisions of the commission; (2) all whaling ships are identical; (3) the number of whales actually taken is in fact the optimal number in terms of the long-run supply of whales; (4) the number of independent whale-boat operators is very large

    1. Economic theory tells us that resources of capital and labor are allocated optimally under conditions of free competition. Does this happy conclusion follow also for the whaling industry under the described arrangement? Specifically, is the optimal amount of labor and capital devoted to whaling ships and crews? Explain.
    2. Suppose that instead a perpetual monopoly right to take whales were sold at public auction, and other whalers were prohibited from taking whales. Would this lead to an optimal allocation of labor and capital?
    3. The main products of the whaling industry are margarine, meal for animal feed, and meat for human consumption. Is this relevant to your answer.

Group II

  1. The Council of Economic Advisers is asked to advise the Administration concerning the desirability of a more stringent anti-price-discrimination law. Write a memo to the chairman of the Council outlining the important theoretical economic considerations on this issue.
  2. “A social welfare function can be conceived of only for situations in which members of society agree on criteria for decisions, for otherwise what is to be maximized cannot be specified. Moreover, the analytical use of such a function implies that men are able to survey and rank all possible states. But men do not usually agree on criteria and in any case are incapable of the required broad survey and ranking. Hence the social welfare function is not a useful tool or concept.” Discuss.

Group III

  1. Point out the similarities and differences between the following two representations of the economic system.
    1. The theory of general equilibrium of prices and quantities of all commodities (as, for example, in Hicks).
    2. The theory underlying Leontief’s input-output analysis
  2. In the past twenty years there have been numerous attempts to estimate statistically firms’ cost functions. Does this research indicate the need for any important revisions in the presentation of cost theory in price theory textbooks? Defend your answer.

Group IV

  1. (a) Show that the first-order conditions for maximization of utility are invariant under a monotonic increasing transformation of the utility function. What is the relevance for the cardinal utility-ordinal utility controversy?

(b) Consider the utility function U = x11 x22 x33… xnn. Let the prices of the goods be p1, p2, …, pn, and the income be y. Show that the price elasticity of the ith good is -1, and the income elasticity is +1.

  1. (a) What is a Cobb-Douglas production function? Is it homogeneous? Are the marginal product of the inputs homogeneous? Prove your assertions. What is implied about returns to scale?
    (b) Show that the expansion path (the locus of points of rational factor combinations) is linear in the inputs so long as the factor markets are competitive.
    (c) What is the relation of the Cobb-Douglas production function to the marginal productivity theory of distribution? Does the relation apply to the firm, industry, or economy, or to some combination of these?

________________________________

THE JOHNS HOPKINS UNIVERSITY
Macro Economic Theory

April 27, 1961

Answer No. 1 and TWO of the remaining three. Weights are equal.

I. Comparative Statics

A Macro-economic system runs as follows:

YD = C + I YD = national income, demand side
YS = L + Q YS = national income, supply side
C = CL + CQ I = investment (autonomous)
L = N·w C = total consumption
CL = CL(L) CL = consumption of wage earners
CQ = CQ(Q) CQ = consumption of non-wage earners
YS = Y(N) L = wage income
w = Y´(N) Q = non-wage income
YD = YS N = employment
w = wage rate

(all these magnitudes in real terms)
    1. Express the investment multiplier in terms of the marginal propensities to consume of wage earners and non-wage earners, the marginal productivity of labor, and the decline in marginal productivity with increasing employment.
    2. Represent the elements (“building blocks”) of this model in graphs.
    3. What assumptions about labor supply would be consistent with this model?
    4. Select one of the following two:

(d1) Kaldor showed that under certain assumptions distribution is determined by the savings ratios of wage earners and non-wage earners and by the proportion of total income used for investment. Does this conclusion follow from the above model too? If not: What special features of Kaldor’s model are responsible for the difference?

(d2) By introducing additional variables and equations extend the model in such a way that investment, instead of being autonomous, depends on the interest rate, while the money supply appears as the autonomous variable. Comment on the explanation of the absolute price level which is implied in your extended model.

2. Growth
    1. Suppose Americans became more thrifty in the sense of a permanent upward shift in the savings function. Would this accelerate or retard long-term economic growth? In what respects do different variants of modern growth theory suggest different answers to this question? How are these differences to be explained? What does classical growth theory say on this problem?
    2. In what sense (or senses) may it be said that Harrod’s (or Domar’s) warranted growth path is a “tightrope” path? In what respect (if any) is this aspect of Harrod’s (or Domar’s) model relevant for the American economy?
3. Dynamics

Consider a “period analysis model” with the following characteristics:

— Production consists of three components: autonomous investment, consumers’ goods, inventory accumulation.

— Initial conditions and autonomous investment are as given in the accompanying table (C = consumption, i = autonomous investment, I = total investment, Y = output, K = inventories).

— Autonomous investment is always correctly anticipated. Production of consumers’ goods in February is scheduled as the amount of actual consumption in January. Any increase in actual consumption relative to the previous month thus causes a “surprise” with a corresponding effect on inventories.

— Producers want to hold inventories in the amount of one month’s total output. Production for inventory accumulation in February is scheduled in the amount of the difference between actual output and actual inventories in January.

— To an increase in output from January to February households react with an increase in consumption from February to March, amounting to one-half of the increase in income.

    1. On the basis of these assumptions, complete the table [below] up to the ninth period. (The empty space may be used for auxiliary columns.) Describe the development of income.
    2. What would be the stationary equilibrium level of output, if any?
    3. Express the characteristics of this model (for given autonomous investment) in terms of difference equations. (Solving not required.)

Question 3: Dynamics
(return this table with your answer)

Month C I I Y K
1 2400 1600 1600 4000 4000
2 2400 1600 1600 4000 4000
3 2000
4 2000
5 2000
6 2000
7 2000
8 2000
9 2000

(The figures represent actual amounts, which may be different from planned amounts.)
4. Economic Policy

“Present unemployment in the United States is largely due to the fact that labor is too expensive in relation to capital. Restoration of full employment thus requires a lowering of real wages. If this is not accomplished by a lowering of money wages, there has to be a rise in prices.” Explain to what extent (if any) this argument may be correct, and in what respects (if any) it may be fallacious. Put your answer in terms which, without being incorrect, an enlightened politician might understand, (No diagrams, no special theoretical terms, no reference to the literature.)

________________________________

THE JOHNS HOPKINS UNIVERSITY
Theory of International Trade

April 25, 1961

Answer any 6 of the following questions.

  1. Compare and contrast the real-cost, opportunity-cost, and factor-endowments approaches to the theory of comparative advantage.
  2. “Free trade is a substitute for factor mobility.” Discuss.
  3. What is the Samuelson-Stolper theorem regarding the effect of tariffs on the distribution of income? What major addition or correction to that theorem was made by Metzler?
  4. What are the international implications of alternative measures of domestic stabilization in the American economy in light of the current U.S. balance of payments problem?
  5. Under what kinds of circumstances would you advise a country to devalue its exchange rate, and what are the conditions necessary for a successful outcome?
  6. Define precisely what you mean by international liquidity. What are the factors determining the world’s need for international liquidity? Do you believe that the world is suffering from a shortage of international liquidity at the present time? Outline briefly the pros and cons of various suggestions that have been advanced to meet such a shortage.
  7. In terms of income models of balance-of-payments adjustment, under what conditions would there be an (a) incomplete, (b) overcomplete, and (c) a perverse adjustment to a balance-of-payments disturbance?
  8. (a) Discuss alternative concepts of the international terms of trade.
    (b) Is an improvement in the net barter terms of trade necessarily associated with an increase in the gains from trade? Why or why not?

________________________________

THE JOHN HOPKINS UNIVERSITY
Public Finance

April 25, 1961

Answer each Part. All questions carry equal weight.

I
  1. Consider the following suggestions for individual income tax reform.
    1. Abolish the standard deductions and permit itemized deductions in excess of 10% of adjusted gross income. Use revenue gain of $8 billion for a 4 percentage point cut in all bracket rates.
    2. Reduce top bracket rate to 60% (revenue loss of $500 million) and give a dividend credit of 50% by British System (revenue loss $2 billion). In turn, tax capital gains at death (constructive realization) at a rate not exceeding 50%, permitting tax free realization if reinvested (roll over) during lifetime (revenue gain of $2.5 billion), and reduce depletion allowances by 50%.

Evaluate these proposals for income tax reform. Would you favor these packages or not, and why?

II

Choose ONE out of two.

  1. It has been suggested that the criteria for a “good tax structure” are quite different, depending on the level of government (Federal, State or local) to which we refer. Analyze this proposition and the underlying reasoning.
  2. “The trouble with the corporation income tax is that it is highly discriminatory as between corporations and unincorporated enterprise, equity and debt finance, corporations undertaking different types of investment, and so forth. If the corporation tax were transformed into a uniform tax on all capital income it would be rendered quite unobjectionable.” Analyze this statement.
III

Answer ONE out of two.

  1. “It makes very little difference with regard to incidence, whether taxes are imposed on expenditures or on income as a base, provided that such taxes are general and uniform. What matters is that taxes usually are not general but selective and that the pattern of selectivity differs with the type of base which is used.” Analyze this statement.
  2. “Incidence deals with the effects of tax policy on the distribution of income. The theory of incidence, therefore, can be no better than the theory of income distribution from which it is derived.” Discuss this statement and examine its validity with regard to specific taxes.
IV

Answer TWO out of three.

  1. “The expansionary or restrictive role of fiscal policy is measured properly by the resulting change in the size of cash surplus or deficit.” Analyze this statement.
  2. The effectiveness of monetary and fiscal policies depends upon certain characteristics of the model of income determination which applies. Under what circumstances, if any, can only fiscal policy be successful in raising employment? Under what circumstances, if any, is it bound to be unsuccessful? Under what circumstances, if any, can only the combined fiscal and monetary action be successful.
  3. Recently there has been considerable controversy over the question whether a countercyclical policy of debt management is desirable. State the main issues in this controversy and give an evaluation thereof.
V

Answer ONE out of two.

  1. What do the principles of public finance tell us about the requirements for a sound system of highway finance? In view of these requirements, how satisfactory is the present system?
  2. “We do not accept the view that as our economy grows federal expenditures would necessarily grow in proportion, or more than in proportion, to the increase of national income — on the contrary, with higher incomes, people should be better able to provide for themselves some of the things for which they now look to government. The level of generally available services that government should provide would require a smaller and smaller proportion of the national income.” (C.E.D., February 1961.) Discuss.

________________________________

ECONOMIC HISTORY EXAMINATION

April 28, 1961

Answer one question from each part.

A.
  1. Identify and discuss critically the views of Ashley and Unwin regarding the role of the central government in English economic development during the XVI and XVII centuries.
  2. Discuss in some detail at least two stage-theories of economic development. Compare them with some alternative theory of economic development.
  3. Assume you were the tutor hired to educate Frederick II of Prussia (1712-1786) in 1730. During the year he was to consider the colonial policies of Spain, France, and Britain in the New World. What would you tell him about each country’s policies? What questions would you put to him in order to point out the weaknesses and strengths of each country’s position?
  4. What were some of the economic problems in the development of a stable political relationship between the British government and its American mainland colonies between 1763 and 1776? Why did these troubles not affect the political relationship between the London government and the West Indian colonies?
B.
  1. What are the central ideas in Toynbee’s The Industrial Revolution? What “triggered” the “revolution”, and what, in your estimation, caused that phenomenon to occur?
  2. What were the roles of political liberalism and religious minorities in the economic development of France, Germany, Russia and England in the XVIII and XIX centuries? Discuss, giving data.
  3. Several observers have noted that there were few labor-saving agricultural inventions for general farming in the United States until the 1820’s. When one considers the comparative supply of land and labor, there seems to be a paradox. How can it be explained?
  4. What were the economic issues separating the North and the South in the 1850’s? Examine each, giving your opinion whether it would have remained an issue if the peace had been preserved from then until 1890.
C.
  1. Discuss the development of the Russian or British economy in the two decades prior to 1914.
  2. Discuss the course of agricultural policy in the United States between 1860 and 1940.
  3. Discuss the evolution of American or British tariff policy 1815-1940.
  4. Discuss the development of the American or British labor movement from the 1840’s until the Second World War.

________________________________

MONETARY THEORY AND POLICY

[in pencil “1961”]

I.

Write for 40 minutes on two of the following three questions.

  1. “Liquidity preference must be regarded as an explanation of the existence and level not of the interest rate but of the differential between the yield on money and the yield on other assets.” (Tobin) Discuss this statement and explain the factors which determine the slope of the liquidity preference function.
  2. “The existence of dynamic or uncertain price and interest expectations is not a sine qua non of a theory of money.” (Patinkin)
    “The necessary condition for the existence of liquidity preference is the existence of uncertainty as to the future rate of interest.” (Keynes)
    Can these two statements be reconciled, and if so, how?
  3. Consider the role which the concept of “natural rate of interest” has played in the development of monetary theory. In what respects is it a particularly useful concept? What changes may be made to render it more useful?
II.

Write for 30 minutes on one of the following two questions.

  1. Write an essay setting forth and analyzing the credit-availability theory, and compare it with the pre-existing theory of central banking.
  2. Review the history of Federal Reserve policy in terms of changing emphasis upon particular policy tools.
III.

Write for 20 minutes on two of the following three questions.

  1. “In the boom, the stock market diverts capital from productive use into speculation.” Analyze this statement.
  2. Analyze the factors which determine the “appropriate” level of bank capital.
  3. “The financial intermediaries are essentially similar to commercial banks and should therefore be subject to similar controls.” Discuss.
IV.

Write for 30 minutes on the following question.

What are the effects of the following changes on (a) money supply, defined to include demand deposits adjusted plus currency outside banks; and (b) excess reserves, assuming a 20% reserve ratio.

  1. Decrease in currency in circulation by $1 billion
  2. Increase in float by $400 million
  3. Sale of $200 million of government securities by the Treasury, of which $150 million is purchased by commercial banks and $50 million by nonbank investors. Assume the Treasury to deposit its proceeds with the Federal Reserve Banks.
  4. Holders of savings deposits at mutual savings banks withdraw $300 million and deposit same as demand deposits at Commercial banks.

In answering the question, you may find it useful to use T accounts

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

Image Source: Fritz Machlup in an economics seminar. Evsey Domar visible sitting third from the speaker on his right hand side. Johns Hopkins University Yearbook, Hullabaloo 1956, p. 15.

Categories
Economic History History of Economics Johns Hopkins Regulations

John Hopkins. Proposals for First and Second Year Graduate Examinations. Musgrave, 1960

Having had just served as a member of the economics faculty at the University of Michigan for the preceding twelve years, Richard A. Musgrave demonstrated the seriousness and enthusiasm for his new job at the Johns Hopkins University starting with the academic year 1960-61. It is interesting to see one and the same person arguing for both more mathematics and more history of economics to be included in the graduate general microeconomic and macroeconomic examinations.

_____________________________

October 19, 1960

MEMO TO:     Members of the Department
FROM:             R. A. Musgrave

            As we mentioned before, it would be desirable to make some announcement to the graduate students indicating how the examinations would be handled this year. I think the announcement could be framed in such a way to relate to this year only, without establishing a new policy or making a precedent for what is to be done thereafter. I indicated to the graduate students at the opening meeting that some such statement would be forthcoming.

            As I understand it, there was a fairly general feeling at the close of last year that it was not very satisfactory to insist upon equal-emphasis examinations in twelve fields, with the result that performance in some areas (as was the case with International Trade) would be below the senior level. At the same time, there also seemed general agreement that the Hopkins tradition of avoiding over-specialization is sound. The following proposal attempts to be in line with these ideas and is herewith submitted for discussion.

            With regard to the proposal for the second year exam, these two questions may be thought about:

  1. I do think it is sound that a certain amount of mathematical economics and history of thought should be worked in with the general theory examinations rather than be treated as a special area. A person specializing in mathematical economics would be free to choose econometrics as one of his fields anyhow. A person specially interested in history of thought might be permitted to offer this as a special field. In other words, history of thought might be added to the optional fields listed on the next page.
  2. If the student chooses two out of the six optional fields, this of course means that there remain four fields which are not at all covered. If we are worried about this, we might add a requirement that a student must have done a certain amount of course work in these fields. Or one might add sort of “minima examinations” in these other fields, as distinct from the more intensive examinations in the special fields. But this would again greatly increase the examination load.

Graduate Students’ Examinations in Political Economy
Spring 1961

            Our examination procedure this year will be as follows:

First Year Graduate Students. There will be an oral examination in the latter part of May. This examination is designed to give the Department an opportunity to confirm its judgment that the incoming graduate students have the ability to meet the requirements of Ph.D. work, to explore the extent of the students’ preparation in various areas, and to determine in what areas additional work is needed. The Staff is aware of the work which a student has done before coming to Hopkins, and of the courses which he is taking this year. The examination is conducted accordingly, and no preparation distinct from regular course work is required.

Second Year Graduate Students. In May, second year graduate students will come up for their Ph.D. generals. The generals consist of a set of written examinations and an oral examination. The oral examination covers the general range of work which has been completed. The written examination will include the following papers, four hours each.

  1. Theory. There will be a paper on micro theory and macro theory each. There will be no separate papers in mathematical economics and history of thought. Rather, the papers dealing with micro and macro theory will contain some questions demanding an answer which involves mathematical tools; as well as questions involving a historical perspective on the development of doctrine. The examination in micro theory will include the theory of relative prices, incomes, and welfare economics. The examination in macro theory will include the theory of income determination, growth and stabilization policy.
  2. Statistics.
  3. Economic History. The examination in Economic History will include questions on American and European economic history. Students who have not taken work in economic history here will be held responsible for two books, as follows: (To be inserted).
  4. Optional Fields. In addition to the preceding four examinations, the student may choose two of the following fields: International trade, industrial organization, labor, public finance, money, economic development, and econometrics. A substantial familiarity with the chosen field is required.

Source: The Ferdinand Hamburger, Jr. Archives of the Eisenhower Library at Johns Hopkins University. Department of Political Economy, Series 7, Subseries 1.  Box No. 3/1. Folder “Graduate and Undergraduate Curriculum 1953-1961.”

Image Source: Richard A. Musgrave page at the University of Michigan’s Faculty History Project.

Categories
Economist Market Economists Johns Hopkins Yale

Yale. Evsey Domar’s Letter of Support for Promotion of Thomas Schelling to Full Professorship, 1957

For anyone whose experience in academic hiring and promotions has only been acquired over the past several decades, it might come as a shock that outside letters to support a department’s vote to offer a full professorship back in the 1950s would hardly exceed the length of a very modest thread of tweets today. To be honest, a thumbs-up emoji would have been an adequate response to Yale’s request for Evsey Domar’s opinion on the work of Thomas C. Schelling. 

Since the two letters transcribed for this post are so short, I figure that this is as good an opportunity as any to add a brief bio written for the 1962 Radcliffe Yearbook. The poor quality of the yearbook image is a pity, but at least we have a classic Harvard professorial pose complete with a bow-tie and a cigarette held à la Madmen.

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From the 1962 Radcliffe Yearbook

THOMAS C. SCHELLING, Professor of Economics, graduated from high school just after the Great Depression. Upon entering the University of California in Berkeley, he decided to major in economics: “Somehow I felt that the social conflicts, the severe poverty, even the problems of war, were partly solvable by a knowledge of economics.” He graduated with an A.B. in 1944 and got his Ph.D. at Harvard in 1951.

Professor Schelling’s varied career background includes two years with the Marshall Plan (in Copenhagen and in Paris, 1948-50); Associate Economic Adviser to the Special Assistant to the President (1950-51); Officer-in-charge, European Program Affairs, Office of the Director for Mutual Security, Executive Office of the President (1951-53); Yale University (1953-58); the RAND Corporation (1958-59). He has been at Harvard since 1959, on the faculty and says, “Harvard students are more interesting to teach than those at Yale.”

Primarily interested in the relationship between economics and national security, Professor Shelling recently collaborated on Strategy and Arms Control, published in 1961. Other works include National Economic Behavior, International Economics, and numerous articles in various periodicals.

Although teaching and consultation in foreign policy (he is a member of the Scientific Advisory Board, U.S. Air Force) take up most of his time, Professor Shelling is now turning his research interests to the problems of bargaining and conflict management, particularly as these problems affect foreign affairs.) Professor Schelling feels that, although a nuclear test moratorium would be a good thing, test bans without some system of control or inspection are unworkable. Furthermore, he feels that cessation of tests alone is not a potent form of disarmament. As for the testing itself, we don’t really know whether testing is necessarily harmful.

Source: The 1962 Radcliffe Yearbook, p. 91.

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Yale Requests Domar’s Opinion of Schelling

Yale University
Department of Economics
New Haven, Connecticut

Lloyd G. Reynolds, Chairman

February 18, 1957

Professor Evsey Domar
Department of Political Economy
Johns Hopkins University
Baltimore 15, Maryland

Dear Evsey:

The Department here has voted to promote Thomas C. Schelling to the rank of Professor of Economics. We are now about to begin putting the appointment through the regular committee procedures. It is customary at this stage to invite a number of leading scholars in other institutions to appraise the qualifications of the candidate. I should be grateful if you could take time to write me your impression of Schelling—the quality of his thinking and scholarship, his probably contribution to economics over the long run, his professional standing in comparison with other men of about his own age, and his general suitability for a professorship here.

We shall value your judgment and I am sure will find it helpful in putting the matter before our faculty for action.

Sincerely yours,
[signed] Lloyd

LGR/shd

_____________________________

Copy of Domar’s Response

25 February 1957

Professor Lloyd G. Reynolds
Chairman
Department of Economics
Yale University
New Haven, Connecticut

Dear Lloyd:

This is in response to your letter of February 18 regarding the qualifications of Thomas C. Schelling.

I have known him approximately since 1944 or 1945 and have read most of his writings. He is an exceptionally capable young man, endowed with creative intelligence and with common sense. I have the highest opinion of him as an economist and great hopes regarding his contribution to economics.

In comparison with other men of his age he stands out very close to the top. I would support his promotion most wholeheartedly.

Sincerely yours,

Evsey D. Domar
Professor of Political Economy
The Johns Hopkins University
(on leave, spring term, 1956-57)

EDD:am

Source: Duke University. David M. Rubenstein Rare Book & Manuscript Library, Economists’ Papers Archive. Evsey D. Domar Papers, Box 8, Folder “Yale University (1 of 2)”.

Image Source: Thomas Schelling portrait, 1964. Harvard University. Office of News and Public Affairs. Hollis Images olvwork369281.

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Exam Questions Johns Hopkins Undergraduate

Johns Hopkins. Undergraduate economics examinations, 1921-1922

 

Mid-year and year-end exams for the undergraduate political economy courses at Johns Hopkins for the academic year 1921-1922 have been transcribed for this post. Exams for the second semester of Political Economy V and VI were not found in the department’s file of old examinations. Names of instructors with their educational backgrounds along with short course descriptions are provided below as well.

_______________________________

Previous years’ exams transcribed

Undergraduate exams for 1919-20.

Undergraduate exams for 1922-23.

Undergraduate exams for 1923-24.

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Johns Hopkins Faculty 1921-22
For Undergraduate Courses in Political Economy

Weyforth, William Oswald, Ph.D., Associate in Political Economy.

A.B., Johns Hopkins University, 1912, and Ph.D., 1915; Instructor, Western Reserve University, 1915-17.

Mitchell, Broadus, Ph.D., Instructor in Political Economy.

A.B., University of South Carolina, 1913; Fellow, Johns Hopkins University, 1916-17, and Ph.D., 1918.

Barnett, George Ernest, Ph.D., Professor of Statistics.

A.B., Randolph-Macon College, 1891; Fellow, John Hopkins University, 1899-1900, and Ph.D., 1901.

Jacobs, Theo, A.B., Associate in Social Economics.

A.B., Goucher College, 1901; Federated Charities of Baltimore (District Assistant, 1905-07, District Secretary, 1907-10, Assistant General Secretary, 1910-17, Acting General Secretary, 1917-19).

Sources:

Academic Rank  in 1921-22 from The Johns Hopkins University Circular, New Series 1922, No. 7. Report of the President of the University 1920-1921  (November 1922), p. 70.

Academic biographical data from The Johns Hopkins University Circular, University Register 1922-1923, No. 342, January 1923. Announcements for 1923-1924.

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UNDERGRADUATE COURSES
1921-22

Political Economy I. Three hours weekly, through the year. In the first half-year the economic development of England and the industrial experience of the United States were studied. In the second half-year particular attention was given to the history of distribution and its application to leading economic problems. (Dr. Weyforth and Dr. Mitchell.)

Political Economy II. Three hours weekly, through the year. In the first half-year a preliminary study of the value and place of statistics as an instrument of investigation was made; attention was directed to the chief methods used in statistical inquiry. In the second half-year the principles of monetary· science were taught with reference to practical conditions in modern systems of currency, banking and credit. (Professor Barnett and Dr. Weyforth.)

Political Economy IV. Three hours weekly, through the year. In the first half-year the problems growing out of modern industrial employment were studied. In the second half-year the history of the industrial corporation was studied. (Professor Barnett and Dr. Mitchell.)

Political Economy VI. Three hours weekly, through the year. In the first half-year the applications of statistics to business and economic problems, such as price levels, cost of living, wage adjustments, business cycles, and business forecasting, were considered. In the second half-year the theory and practice of finance was considered, with particular reference to the problems of taxation presented in the experience of the United States. (Dr. Weyforth and Dr. Mitchell.)

Political Economy VII. Two hours weekly, through the year. History and development of social work. The responsibility of the State and private organizations toward the dependent, defective, and delinquent. (Miss Theo Jacobs.)

Source:  The Johns Hopkins University Circular, New Series 1922, No. 7. Report of the President of the University 1921-1922  (November 1922), pp. 56-57.

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THE JOHNS HOPKINS UNIVERSITY
POLITICAL ECONOMY I
(Academic Section)

January 30, 1922 — 2-5 P.M.

  1. What was the economic situation of England during the Roman occupation?
  2. Describe the economic strength and weakness of the manorial system, and show how the feudal plan suggests the Single Tax scheme.
  3. What elements in gild life would be welcome in our present industrial order, and what elements of the medieval arrangement would be impossible with us at present?
  4. Tell what you know of trading in England in the middle ages.
  5. Suppose half the people of the United States should die inside of two or three years. What would be the chief economic consequences?
  6. Trace the gradually developing economic freedom of the lowest order of workers in England. Did peasants benefit more from the breaking up of the manorial system, or journeymen and apprentices from the collapse of the gilds?
  7. What was the economic condition of England on the eve of the Industrial Revolution?
  8. What is the significance of the Industrial Revolution? How did the factor system differ from the factory system?
  9. Define briefly: enclosures, Peasants’ revolt, Gresham’s Law, Steelyard, steward, serf or villein, apprentice, domestic system, Doomsday Book, Statute of Artificers, staple, virgate.
  10. What is the chief thing you have learned in this semester?

 

JOHNS HOPKINS UNIVERSITY
EXAMINATION IN POLITICAL ECONOMY I
(Academic Section)

Wednesday, May 31 — 2-5 P.M.

  1. What distinction would you draw between history, political science, and political economy? Explain fully.
  2. What facts in the industrial history of England illustrate economic principles that we have dwelt upon?
  3. Define: Wealth, capital, labor, time discount, wages of superintendence, consumer’s surplus, real wages, economic good, marginal productivity, entrepreneur.
  4. Explain carefully the differential principle of rent. With whose name do we link this theory, and how did Henry George employ the law of rent to justify the Single Tax?
  5. What was the wage-fund theory, and how was it used to discourage trade unionism?
  6. Comment fully on this passage from Adam Smith: “Nothing is more useful than water; but it will purchase scarce anything; scarce anything can be had in exchange for it. A diamond, on the contrary, has scarce any value in use, but a very great quantity of goods may frequently be had in exchange for it.”
  7. What accounts for the phenomenon of interest?
  8. What is meant by pure profit?
  9. Comment upon the decision of the Supreme Court of the United States in declaring the national act imposing a 10% tax on the net profits of industries employing children unconstitutional.
  10. Give, briefly, as many arguments as you can for and against trade unionism?
  11. State the number of firms interviewed by you in connection with the survey of the industrial life of the Negro in Baltimore.

RE-EXAMINATION
POLITICAL ECONOMY I.
[Handwritten note: Late June 1922]

  1. Define the following terms: “entrepreneur”, “marginal utility”, “capital”, “labor”, “diminishing returns”.
  2. Explain fully the differential principle of rent.
  3. Name and describe briefly four theories of wages.
  4. What in your judgment is the best justification for trade unions?
  5. What seems to you the most reasonable theory of interest?
  6. Explain the theory of value to which most emphasis was given in the lecture.

_______________________________

POLITICAL ECONOMY 1.
Dr. Weyforth

Monday — January 30, 1922 — Afternoon.

  1. Describe the chief characteristics of the economic life of the towns in England during the sixteenth and seventeenth centuries.
  2. What was the industrial revolution? What new conditions and what problems in economic life resulted from it?
  3. Define the following terms: goods, free goods, economic exchange value, price,
  4. Explain the underlying principles of “scientific management” in production. State and explain the attitude of organized labor toward scientific management.
  5. Explain how market price is determined under conditions of competition. What is the relationship between market price and expenses of production?
  6. Describe the principal forms of combination that have been used in the United States. Outline the main features of Federal legislation concerning combinations.
  7. What is meant by standard money? What are the requirements of a bimetallic standard? Outline the main features of the monetary legislation of the United States.
  8. What is a corporation? How is it brought into existence? What are its advantages as compared with the partnership or individual enterprise? Describe the principal securities through the issue of which its capital is obtained.

 

JOHNS HOPKINS UNIVERSITY
POLITICAL ECONOMY 1
(Engineering Group)

[N.B. falsely filed as a 1923 exam]

Wednesday, May 31.

  1. Define the various types of credit. Explain how bank credit serves as a substitute for money as a medium of exchange,
  2. Explain the factors that a bank officer takes into consideration in judging of the credit standing of a borrower,
  3. What is the fallacy involved in the mercantilist theory of the desirability of a favorable balance of trade?
  4. Explain the theory that each factor in production tends to receive a share of the product corresponding to its marginal productivity.
  5. What is interest? Give an analysis of the forces that determine its rate.
  6. How do you account for inequalities in the personal distribution of wealth? Why is less inequality desirable? How could it be effected?
  7. What are some of the outstanding economic characteristics of railroad transportation? Explain their bearing upon the following: (a) practice of charging what the traffic will bear; (b) large variations in net earnings with small variations in traffic; (c) cut-throat nature of competition that sometimes develops.
  8. What is socialism? Give briefly the arguments for and against

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POLITICAL ECONOMY II.

Thursday, February 2, 1922 — 9-12 A.M.

  1. What is the distinction between a census and a registration?
  2. Define an average. Illustrate by defining the arithmetic mean, the mode and the median.
  3. Define an index number. Explain the difference between the aggregate and the relative methods of constructing an index number.
  4. Taking the following group of figures calculate the standard deviation:
Height of men No. in Class
5.6 — 5.7 28
5.7 — 5.8 42
5.8 — 5.9 65
5.9 — 5.10 78
5.10 — 5.11 164
5.11 — 6.0 92
6.0 — 6.1 46
6.1 — 6.2 7
  1. For the same group, calculate the mode.
  2. For the same group, calculate the mean.

JOHNS HOPKINS UNIVERSITY
POLITICAL ECONOMY II
Money and Banking
Dr. Weyforth

Friday, June 2

  1. What is bimetallism? What are the chief requisites of a bimetallic standard? What principles do the bimetallists depend for maintaining the concurrent circulation of gold and silver?
  2. Define credit. What are the various kinds of credit? Distinguish especially the difference between investment credit and mercantile or commercial credit?
  3. What is the function of the commercial paper house or note broker in present day commercial banking?
  4. What is (a) a trade acceptance and (b) a bank acceptance? Explain their use and advantages.
  5. What problems are presented to bankers (a) by seasonal fluctuations in business and (b) by cyclical fluctuations in business?
  6. Describe the organization of the Federal Reserve System.
  7. In what way does the Federal Reserve System provide for elasticity in currency and elasticity in credit?
  8. What is the principle that governs the distribution of gold among the nations of the world under normal conditions such as those existing before the war?

_______________________________

THE JOHNS HOPKINS UNIVERSITY
POLITICAL ECONOMY IV
(Labor Problems)

February 2, 1922 — 9 A.M.-12M.

  1. What are the principal reasons for believing that trade unionism and employers’ associations did not originate in the medieval gilds?
  2. State in some detail who Francis Place was and explain his service to trade unionism.
  3. What present-day evidences have we of the spirit which characterized the English combination acts?
  4. State the arguments for and against the “closed shop”.
  5. What do you know of the history of strikes?
  6. Give your estimate of the purposes and progress of workers’ education in England and in the United States?
  7. In the light of what you have learned, do you believe compulsory arbitration likely to promote industrial peace? What would you make the main provisions of a compulsory arbitration law could such be passed by congress?
  8. Speak of the trade agreement and its significance.
  9. Describe briefly one of the books you read during this course.
  10. What do you think will be the next important development in the labor movement in this country?
  11. List the books you have read for this course.

 

EXAMINATION IN POLITICAL ECONOMY IV.

Friday, June 2nd, 1922, (3-5 p.m.)

  1. What are the advantages and disadvantages of the partnership?
  2. Why is a complex capitalization usually superior to a simple form of capitalization?
  3. What is the distinction between preferred and common stock as to (a) income, (b) control, (c) risk?
  4. Define mortgage bonds, debenture bonds, income bonds, collateral bonds and equipment trust bonds.
  5. What is meant by amortization? Under what circumstances is some provision for amortization necessary for the protection of the bond-holders?
  6. What is the distinction between an underwriting syndicate with undivided liability and a syndicate with divided liability?
  7. Does a stock dividend theoretically increase the total value of the stock outstanding? Practically how does it frequently work and why?
  8. What are the advantages of the holding company form of organization?

 

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POLITICAL ECONOMY VI
Dr. Weyforth.

Tuesday — January 31, 1922 — Afternoon.

  1. Explain the construction of a logarithmic chart. What are its advantages?
  2. Explain and illustrate the construction of (a) an index number of relatives, and (b) an index number of aggregates. What advantages are claimed for the latter?
  3. Describe the way in which the Bureau of Labor Statistics index number of the total cost of living is constructed
  4. What is the utility of an index number of the physical volume of production? Explain how Professor Stewart and Professor Day respectively constructed their index numbers.
  5. Explain as fully as you can the system employed by the Harvard University Committee on Economic Research for the forecasting of business conditions.

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[POLITICAL ECONOMY VII.]
SOCIAL ECONOMICS
Miss Jacobs.

Monday — January 30, 1922  — Morning

  1. Give the arguments for and against public outdoor relief.
  2. Give the war and peace time activities of the American Red Cross.
  3. What is the Confidential Exchange of Information? What is its value to the community?
  4. What are the effects of dependency and delinquency upon the community?
  5. Give some of the causes of poverty. Tell how some of them may be lessened or eradicated.
  6. Give the objects and aims of three (3) social organizations that seem the most important to you.

 

Source: Johns Hopkins University. Eisenhower Library. The Ferdinand Hamburger, Jr. Archives. Department of Political Economy, Series 5/6. Box No. 6/1, Folder “Exams 1907-1924.”

Image Source. Gilman Hall image from the 1924 edition of the Johns Hopkins’ yearbook Hullabaloo.

 

Categories
Exam Questions Fields Johns Hopkins

Johns Hopkins. Graduate Theory of International Trade Exam. Machlup and Harberger, 1951

 

THE JOHNS HOPKINS UNIVERSITY
Theory of International Trade

Drs. Fritz Machlup and Arnold C. Harberger
May 28, 1951

Answer three questions including I.

I.

Assume that Country A has been importing 1,000,000 tons of X per period over a duty of $2.00 per ton. Domestic production has been 11,000,000 tons per period, the domestic price $6.00 per ton. Pure competition prevails among domestic and foreign producers. Demand and supply conditions remain stable everywhere; the elasticity of domestic demand is -1.0, the elasticity of domestic supply is + 0.5, and the elasticity of the foreign excess supply is infinite.

Now a tariff reduction of $1.00 per ton is granted for imports up to a certain maximum per period; imports in excess of this quota are permitted but subject to the full duty of $2.00. State the effects of the tariff reduction upon domestic price, domestic production, and total imports of X and upon customs revenue, if the tariff quote is

(a) 1,000,000 tons of X per period;
(b) 2,000,000 tons of X per period; and
(c) 4,000,000 tons of X per period.

[Your calculations need not be exact.]

 

II.

Comment on the following statements and discuss whether and under what conditions they may be true or false.

  1. A country cannot gain from imposing an export tax if the foreign demand for its exports is of greater than unit elasticity.
  2. In a country with a relative scarcity of capital the real interest rate will be higher if a general import tariff is imposed than it would be under free trade.
  3. For every situation in which trade is encumbered by tariffs, there exists a situation of unencumbered trade in which all countries involved would be better off.

 

III.

Would you expect “national welfare” in Country A to increase, decrease, or remain the same as a result of

  1. an increase in foreign demand for the export product(s) of country A?
  2. an increase in the foreign excess supply of the product(s) which country A imports?
  3. an improvement in technology in Country A?
  4. a tariff imposed on its imports by Country A?
  5. a tax imposed on its exports by Country A?
  6. a tariff imposed on imports from Country A by country B (the rest of the world)?
  7. a tax Imposed on exports to country A by country B (the rest of the world)?

Give reasons for your answers.

 

IV.

It is generally agreed that the receipt of dollar grants by a country will raise its maximum level of real consumption plus investment. Little has been said in the literature about changes in the relative shares of the increased total which go to the various factors of production. On the basis of the analysis developed in this course, what can be said about the circumstances under which these relative shares are likely to change? Are they likely to change at all? If so, in what direction? If not, why not? In your discussion, assume continuous full employment in all (both granting and receiving) countries, and assume that the grant is used fully by the receiving country.

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