Category: Exam Questions

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Exam Questions Harvard

Harvard. Principles of Money and Banking, Midyear Exam. Schumpeter, 1927-1928

 

 

I just returned from a recent trip that included 5.5 working days in the Harvard University Archives. Among the images of treasures for transcription that I have brought back are the mid-year examinations for several decades of Harvard’s year-long economics courses. My first order of business now  has been to add the corresponding mid-year examinations to material already posted for Harvard courses here at Economics in the Rear-view Mirror.

We now add a course taught by the ever popular and ultimate click-bait, Joseph Schumpeter. The final examination questions for his 1927-28 course, Principles of Money and Banking, have been posted earlier. Now we also learn something about what was covered in the first semester of that course.

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1927-28
HARVARD UNIVERSITY
ECONOMICS 38

Mid-Year Examination

  1. Write as fully as possible on either one or the other of the following subjects:
    1. What is the monetary system set up by the English Gold Standard Act of 1925, and how does its working differ from either an unrestricted gold system or the gold exchange standard?
    2. If a bank creates new credit in order to grant a loan, then, so long as the loan remains outstanding, it acts like a tax or compulsion to save imposed on the community jointly by the borrower and the bank. (D. H. Robertson, Money. p. 90) Explain and criticize.
  2. Answer shortly two out of the four following questions:
    1. Some authors think that a system of paper circulation would work more, others that it would work less in accordance with the quantity theorem than the gold standard. Which view is the correct one?
    2. What is the difference between the ‘equation of exchange’ as constructed respectively by Irving Fisher and by Marshall-Pigou-Keynes?
    3. Why and in what sense is bimetallism unstable?
    4. What difference is there between choosing some commodity as a ‘standard of value’ and actually using it as a means of exchange, which physically changes hands?

 

Source: Harvard University Archives. Examination Papers, Mid-Years, 1927-28 (HUC 7000.55), Papers Printed for Mid-Year Examinations. History, History of Religions,… , Economics,… , Military Science, Naval Science. January-February, 1928.

Image Source: Harvard University Archives. “Joseph A. Schumpeter seated on bench in forested area, ca. 1931“.

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Exam Questions Harvard

Harvard. Modern Schools of Economic Thought, Midyear Exam. Schumpeter, 1927-1928.

 

 

I just returned from a recent trip that included 5.5 working days in the Harvard University Archives. Among the images of treasures for transcription that I have brought back are the mid-year examinations for several decades of Harvard’s year-long economics courses. My first order of business now  is to add the corresponding mid-year examinations to material already posted for Harvard courses here at Economics in the Rear-view Mirror.

We begin with a course taught by the ever popular and ultimate click-bait, Joseph Schumpeter. The final examination questions for his 1927-28 course, Modern Schools of Economic Thought, have been posted earlier. Now we know something about what was covered in the first semester of that course.

________________________

1927-28
HARVARD UNIVERSITY
ECONOMICS 15

Mid-Year Examination

  1. Write as fully as possible on either one or the other of the following subjects:
    1. What is the distinctive characteristic of Capitalism and how does the view we have about it influence our capital concept?
    2. The evolution and basic function of the Entrepreneur.
  2. Answer shortly two out of the four following questions:
    1. The substitution of capital for labor means the substitution of labor assisted by much waiting for labor assisted by little waiting. (Marshall) Criticize.
    2. What is meant by the ‘superior bargaining power’ of the entrepreneur and how much does what is meant by it amount to in explaining entrepreneur’s gains?
    3. According to the theory of marginal utility, prices are proportional to marginal utility. According to the Ricardian theory of value prices are—fundamentally—proportional to quantities of labor necessary for the production of commodities. Prove that the second proposition, upon the introduction of suitable assumptions, turns out to be a special case of the first.
    4. A rise in any element of expenses of production is generally held to raise the prices of products. Interest is an element of expenses of production. The rate of discount is obviously a rate of interest. Yet it is held that raising the rate of discount will depress prices. Explain and criticize.

 

Source: Harvard University Archives. Examination Papers, Mid-Years, 1927-28 (HUC 7000.55), Papers Printed for Mid-Year Examinations. History, History of Religions,… , Economics,… , Military Science, Naval Science. January-February, 1928.

Image source: Joseph A. Schumpeter at table with books, photograph, ca. 1930. Detail from image posted at Harvard University Archives. Joseph Schumpeter Papers. HUGBS 276.90p (38).

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Columbia Exam Questions History of Economics

Columbia. Types of Economic Theories, Exam questions. W. C. Mitchell, 1914, 1923-37

 

 

This post provides about two dozen examinations I have found for the legendary course “Types of Economic Theory” that was taught for several decades at Columbia University by Wesley Clair Mitchell. Given the enormous work Mitchell clearly put into this course, judging from the vast archival record of his notes, I am rather struck by the utter lack of imagination reflected in the examination questions. A single good secondary text would have been enough to ace his exams. Maybe students were different then and required no incentive to read original texts and attend lectures…yeah, right.

Stenographic student notes for the course  were originally prepared by John Meyers during 1926-27 with new editions prepared periodically up through the Spring session 1935. These mimeographed and bound lecture notes were later edited by Joseph Dorfman and reprinted by Augustus M. Kelley. Volume I (1967) can be borrowed for two weeks at a time at the archive.org website; Volume II (1949) is available at the hathitrust.org web site.

Lecture Notes on Types of Economic Theory, Volume I. New York: Augustus M. Kelley, 1967.
(Mercantilism, Smith, Bentham, Malthus, Ricardo, Philosophical Radicals, John Stuart Mill). 

Lecture Notes on Types of Economic Theory, Volume II. New York: Augustus M. Kelley, 1949.
(Jevons, Marshall, Fetter, Davenport, Von Wieser. Schmoller, Walras, Cassel, Veblen, Hobson, Commons).

Finding aid for the Wesley Clair Mitchell papers, 1898-1953. at Columbia University Archives.

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Types of Economic Theory
Special Examination for Mr. Hall [?]
Jan. 27, 1914.

  1. Expound Bentham’s theory of how men’s actions are determined.
  2. Explain the character of the economic man as found in Ricardo’s “Principles.”
  3. What, if anything, did Senior add to the concept of the economic man?
  4. What evidence of Bentham’s, of Ricardo’s, and of Senior’s influence do you find in J. S. Mill’s Principles of Political Economy?

Please return this paper with your answers to
W. C. Mitchell, 37 W. 10thStreet.

Source: Columbia University Libraries, Manuscript Collections. Mitchell, W.C. Collection, Box 1, Folder “A529, 1/27/14”.

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Examination (10 copies)
Economics 121
January 25, 1923
1:15 p.m. 614 Kent

  1. Give a brief sketch of Adam Smith’s life, with special reference to the experiences which prepared him for writing the “Wealth of Nations”.
  2. How did Malthus come to write his “Essay on the Principle of Population”? How does the second edition differ from the first?
  3. What bearing had Jeremy Bentham’s work on the development of economic theory?
  4. Outline Ricardo’s theory of distribution. How did he demonstrate his “laws”?
  5. Who were the Philosophical Radicals? What did they do?

161 W. 12thSt.

Source: Columbia University Libraries, Manuscript Collections. Mitchell, W.C. Collection, Box 2, Folder “A60, 1/25/23”.

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Economics 121
Types of Economic Theory
Professor Mitchell
(50 copies desired)

  1. Sketch Adam Smith’s life, pointing out the experiences which influenced the development of his economic theory.
  2. What was Bentham’s felicific calculus, and what interest has it for economists?
  3. What effect did the struggle over the corn laws in 1812-15 have upon the development of English economic theory?
  4. Expound Ricardo’s theory of distribution.
  5. Who were the Philosophical Radicals and for what did they stand?

Source: Columbia University Libraries, Manuscript Collections. Mitchell, W.C. Collection, Box 2, Folder “A16, 2/8/23”.

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Economics 121
Deficiency Examination
April 8, 1924

  1. Who were the Physiocrats? What influence did their views have upon the Wealth of Nations?
  2. How did the French Revolution affect the development of economic theory in England?
  3. Give an account of the Corn-Law struggle in 1812-15, and show its influence upon Classical political economy.
  4. & 5. State the leading differences between economic theory as expounded by Adam Smith and Ricardo.

Source: Columbia University Libraries, Manuscript Collections. Mitchell, W.C. Collection, Box 2, Folder “A61, 4/8/24”.

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Economics 121
Types of Economic Theory
Deficiency Examination
April 25, 1924

  1. Discuss the question whether Ricardo held an “iron law” of wages.
  2. State briefly who the following persons were and what relation they had to the development of economic theory.
    David Hume; S. de Sismondi; J. B. Say;
    Sir James Steuart; Richard Jones; Francis Place;
    R. J. Turgot; Thomas Tooke; J. R. McCulloch;
    Jeremy Bentham
  3. What bearing had the Industrial Revolution on the rise of economic theory?
  4. Just what did the term “distribution of wealth” mean to Ricardo?
  5. What distinction did J. S. Mill make between the character of the laws of distribution and of production, and what importance did he attach to this distinction?

Source: Columbia University Libraries, Manuscript Collections. Mitchell, W.C. Collection, Box 2, Folder “A62, 4/25/24”.

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Economics 122
Types of Economic Theory.
Final Examination
1:10 p.m. May 16th1924

  1. What are the chief differences between the “mechanics of utility,” as developed by Jevons, and classical political economy?
  2. How far is Marshall able to carry his analysis of prices back to what he calls “real forces”?
  3. Compare the types of economic theory represented by Davenport and Veblen.
  4. Discuss the possibility of developing a scientific treatment of economic welfare.
  5. Along what lines do you think we should endeavor to develop economic theory in the near future?

Source: Columbia University Libraries, Manuscript Collections. Mitchell, W.C. Collection, Box 2, Folder “A63, 5/16/24”.

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Examination
Types of Economic Theory
Economics 121
Tuesday, January 27, 1925

  1. State the leading contents of “The Wealth of Nations”.
  2. Sketch the historical background of Malthus’ “Essay on the Principle of Population.”
  3. What is the classical theory of rent, and what led to its development?
  4. Who were the Philosophical Radicals and what did they do?
  5. Compare Ricardo’s and John Stuart Mill’s treatises on Political Economy.

Source: Columbia University Libraries, Manuscript Collections. Mitchell, W.C. Collection, Box 2, Folder “A57, 1/27/25”.

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Economics 122
Types of Economic Theory
Final Examination
Saturday, May 23, 1925
1:00 p.m. 309 Business.

  1. Characterize briefly the chief types of economic theory now current.
  2. Compare the theory of prices as expounded by Davenport with the theory of prices as expounded by Jevons.
  3. Why is the theory of production little emphasized in recent economic treatises?
  4. State the chief contributions to economic theory made by Marshall and Veblen.
  5. Draw up a brief outline of the topics which you think a treatise on economic theory should cover.

Source: Columbia University Libraries, Manuscript Collections. Mitchell, W.C. Collection. Box 2, Folder “A54, 5/23/25”.

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Economics 121
Types of Economic Theory
Mid-year Examination
Thursday, Jan. 27, ‘29
1:10 p.m. 401 Fayerweather

  1. What contact did Adam Smith make with the Physiocrats? What influence did this contact have upon the Wealth of Nations?
  2. Discuss the connection between social developments in England and the Malthusian theory of population.
  3. Compare the scope of economic theory as presented in Ricardo’s Principles of Political Economy and Taxation and in the Wealth of Nations.
  4. In what way did Jeremy Bentham influence the development of economic theory?
  5. Discuss the history of political economy in England between Ricardo’s death and 1848.
  6. Explain the significance of what John Stuart Mill held to be the most important innovation in his Principles of Political Economy.

 

Special examination, March 16
[handwritten notes]

  1. Expound Adam Smith’s “obvious and simple system of natural liberty.”
  2. Who discovered the classical theory of rent, and under what circumstances?
  3. Who were the leading figures among the Philosophical Radicals? What did they attempt to accomplish in social science and in social life?
  4. Contrast the methods of economics practiced by Malthus and Ricardo.
  5. What is the wages-fund doctrine? Point out its most serious shortcomings as an explanation of the process by which wages are determined.

Source: Columbia University Libraries, Manuscript Collections. Mitchell, W.C. Collection, Box 2, Folder “A55, 1/27/27”.

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Economics 122
Final Examination
May 14, 1927
1:30 p.m. 301 F.

  1. Discuss the dictum: “…a special theory of value is at least quite unnecessary in economic science.”
  2. Contrast the types of economic theory represented by Fetter and Veblen.
  3. What advantage, if any, can an economic theorist derive from the study of psychology? of history?
  4. What are the characteristics of Marshall’s theory which differentiate it from the other types studied?
  5. Why has the production of wealth ceased to be a leading topic of economic theory? Do you think more attention should be paid to that problem in the near future? Why?

Source: Columbia University Libraries, Manuscript Collections. Mitchell, W.C. Collection,  Box 2, Folder “A56, 5/14/27”.

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Economics 121
Types of Economic theory
Examination
February 2d, 1928
1:10 p.m. Fayweather

  1. Compare the types of economic theory represented by Davenport and Cassel.
  2. Discuss Fetter’s attempt to eliminate “the old utilitarianism and hedonism which have tainted the terms and conceptions of values ever since the days of Bentham?”
  3. How does Veblen’s treatment of human nature differ from Marshall’s treatment?
  4. Is there a significant difference between the conception of economics developed by the historical school and by the “institutional theorists”?
  5. What implications do you see in the contention that economics is one of the sciences of human behavior?

Source: Columbia University Libraries, Manuscript Collections. Mitchell, W.C. Collection,  Box 2, Folder “A58, 2/2/28”.

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Economics 121
Types of Economic Theory

  1. Discuss the relations between the Wealth of Nations and economic conditions during the 18th century in Great Britain.
  2. What bearing had the work of Jeremy Bentham on the development of classical political economy?
  3. Outline Ricardo’s theory of value.
  4. Discuss the development of economic theory in England between 1817 and 1848.
  5. Compare the conditions influencing the development of industrial technique and of economic theory.

Source: Columbia University Libraries, Manuscript Collections. Mitchell, W.C. Collection, Box 2, Folder “A59, 1/29/29”.

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Economics 121
Types of Economic Theory
Examination
1:10 p.m., January 28, 1930

  1. Outline briefly the Wealth of Nations
  2. Compare the treatment of distribution by Adam Smith and Ricardo.
  3. State John Stuart Mill’s view of the “principle of population”
  4. Sketch the development of political economy between Ricardo’s death and 1848.
  5. What is the “felicific calculus”?

Source: Columbia University Libraries, Manuscript Collections. Mitchell, W.C. Collection, Box 2, Folder “A64, 1/28/30”.

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COLUMBIA UNIVERSITY
Economics 122
TYPES OF ECONOMIC THEORY
[handwritten note: “Final Exam May 1930”]

  1. Discuss the treatment of “real forces” in economic activity by Jevons, Marshall and Davenport.
  2. Compare the psychological concepts used by Schmoller, Fetter and Veblen.
  3. Sketch the argument of Hobson’s welfare economics.
  4. Compare the framework of economic theory presented in John Stuart Mills’ and in Marshall’s “Principles”.
  5. Discuss the question whether the theory of value should be excluded from economics.

 

Source: Columbia University Libraries, Manuscript Collections. Mitchell, W.C. Collection, Box 2, Folder “A397, 5/?/30”.

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Deferred examination in Economics 121.
April 15, 1931

  1. What was the Corn Law controversy in Great Britain and what bearing did it have upon the development of economic theory?
  2. Discuss John Stuart Mills’ treatment of the theory of value.
  3. What is the relationship between the theory of value and the theory of distribution in Ricardo?
  4. Compare the views of Adam Smith and Malthus on the population problem.

Source: Columbia University Libraries, Manuscript Collections. Mitchell, W.C. Collection, Box 2, Folder “A53, 4/15/31”.

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Economics 122
Types of Economic Theory
Examination, 9 A.M.
May 19, 1931
301 Fayerweather

  1. Compare the scope of economic theory as presented by Marshall, Schmoller and Davenport.
  2. What do you understand “institutional economics” to be?
  3. Expound Fetter’s theory of interest.
  4. What is the central problem of economic theory according to Cassel, and how does he attack it?
  5. What advances has economic theory made since the days of Ricardo?

Source: Columbia University Libraries, Manuscript Collections. Mitchell, W.C. Collection, Box 2, Folder “A359, 5/19/31”.

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ECONOMICS 121
TYPES OF ECONOMIC THEORY
Examination, 4:10 p.m., January 31, 1933, 410 Fayerweather

  1. Discuss the relation between the development of economic theory and of economic life in England from the time of Adam Smith to the time of Ricardo.
  2. Expound Malthus’ “principle of population”.
  3. Analyze Ricardo’s method of developing economic theory.
  4. What did J. S. Mill regard as the chief contribution to economic theory. Why did he attribute great importance to this idea?
  5. Compare the theories of value presented by Ricardo and by Jevons.

 

Source: Columbia University Libraries, Manuscript Collections. Mitchell, W.C. Collection, Box 3, Folder “A49  1/31/33”.

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COLUMBIA UNIVERSITY
Examination…..Economics 122…..Types of Economic Theory
1:10 p.m. Thursday, May 25, 1933

  1. Show how Marshall integrated economic theory
  2. Compare the types of economic theory developed by Davenport and Cassel.
  3. What is “institutional economics?”
  4. Can historical study contribute to economic theory? Give reason for your answer.
  5. Discuss the relations between economics and psychology.

Source: Columbia University Libraries, Manuscript Collections. Mitchell, W.C. Collection, Box 3,  Folder “A399  5/25/33”.

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ECONOMICS 121
Types of Economic Theory
1.10 p.m. January 30, 1934

  1. Discuss the influence of economic developments in England upon the theoretical work of Smith, Malthus and Ricardo.
  2. Discuss the influence of the work of these men upon economic developments.
  3. Present the felicific calculus.
  4. Sketch the working conceptions of human nature entertained by William Godwin, Malthus and John Stuart Mill, and show how those conceptions shaped their theorizing.
  5. Give a brief summary of Ricardo’s leading propositions.

Source:  Columbia University Libraries, Manuscript Collections. Mitchell, W.C. Collection, Box 3, Folder “A50  1/30/34”.

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Economics 122
TYPES OF ECONOMIC THEORY
Final examination
1.10 p.m. Friday, May 25, 1934
302 Fayerweather

  1. Discuss the scope of economics as represented by Davenport and Schmoller.
  2. What were Marshall’s chief contributions to the development of economic theory?
  3. State your conception of “institutional” economics.
  4. Compare the psychological views of Jevons and Fetter.
  5. Expound Cassel’s theory of pricing.

Source:  Columbia University Libraries, Manuscript Collections. Mitchell, W.C. Collection, Box 3, Folder “A398  5/25/34”.

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ECONOMICS 121
TYPE OF ECONOMIC THEORY
[28 January 1935]

  1. State Adam Smith’s argument for adopting “the simple and obvious system of natural liberty.” What bearing has it upon national economic planning?
  2. Discuss the conceptions of human nature implied by Ricardo’s theories of rent, profits, and wages.
  3. What do you understand by “the levels of analysis” in economic theory?
  4. Compare the expectations concerning “the futurity of the laboring classes” entertained by Ricardo and John Stuart Mill.
  5. Contrast the methods of inquiry employed by Malthus and Ricardo.

Source: Columbia University Libraries, Manuscript Collections. Mitchell, W.C. Collection, Box 3, Folder “A51  1/28/35”.

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FINAL EXAMINATION IN TYPES OF ECONOMIC THEORY
Economics 122
Tuesday, May 21, 1935
301 Fayerweather

  1. State and discuss the merits of the program for rebuilding economic theory developed by the Historical School.
  2. Compare the types of economic theory represented by Marshall and by Cassel.
  3. Discuss Veblen’s critique of orthodox economic theory.
  4. Compare the types of economic theory represented by Fetter and by Davenport.
  5. What in your opinion are the leading problems of economic theory?

Source:  Columbia University Libraries, Manuscript Collections. Mitchell, W.C. Collection, Box 3, Folder “A396  5/21/35”.

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EXAMINATION IN ECONOMICS 121
TYPES OF ECONOMIC THEORY
[Handwritten note:  Jan. 1936]

  1. Give an outline of the Wealth of Nations.
  2. Sketch Ricardo’s theory of distribution.
  3. Compare the implications of the “principles of population” for the future of mankind as seen by Malthus and by J. S. Mill.
  4. Discuss the “levels of analysis” in J. S. Mill’s Principles of Political Economy.
  5. Compare the methods of establishing economic propositions employed by Malthus and Ricardo.

.Source:  Columbia University Libraries, Manuscript Collections. Mitchell, W.C. Collection, Box 3, Folder “A65  1/?/36”

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ECONOMICS 121
TYPES OF ECONOMIC THEORY
Examination Jan. 23, 1937
1:10 p.m. Fayerweather Hall

  1. State and discuss Adam Smith’s argument for “the obvious and simple system of natural liberty”.
  2. What relation does Bentham’s felicific calculus have to economic theory?
  3. Compare the conceptions of human nature entertained by Malthus and by John Stuart Mill.
  4. What position does the theory of distribution hold in the economic theory of Adam Smith, Ricardo and Mill?
  5. Expound briefly Mill’s theory of value and point out its chief limitations.

Source: Columbia University Libraries, Manuscript Collections. Mitchell, W.C. Collection, Box 3, Folder “A52 1/23/37”.

Image Source: Wesley Clair Mitchell from Albert Arnold Sprague’s and Claudia C. Milstead’s Genealogical Website.

 

 

Categories
Exam Questions Harvard Undergraduate

Harvard. Examination questions for Political Economy I, 1884-1888.

 

 

 

With this post we add about fifty new questions to our growing stock of Harvard economics examinations. Nine of the sixty-three questions transcribed below are identical or nearly identical to those found in the 310 questions appended to Laughlin’s abridged version of John Stuart Mill’s Principles that served as the course textbook at Harvard at the end of the 19th century.

See:  Principles of political economy, by John Stuart Mill. Abridged with critical, bibliographical, and explanatory notes, and a sketch of the history of political economy by, J. Laurence Laughlin. New York: D. Appleton, 1884.

The new questions come from what we would today call a “Student’s Guide” to the Mill/Laughlin textbook. He called the printed 72-pages a “Synopsis”.

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About Laughlin’s “Student’s Guide to John Stuart Mill”

This Synopsis is intended to replace the text book in preparing for the examinations, but it will also be found extremely useful during the year in answering the weekly written questions. The index at the end has been prepared especially for use in connection with the examination papers contained in the appendix to this book, and in the second appendix to the text book.

A Synopsis of the First Three Books of John Stuart Mill’s Principles of Political Economy, as revised by Prof. J. L. Laughlin with an appendix containing the recent examination papers in Political Economy I. Cambridge, Mass.: W. H. Wheeler, 1888.

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PAPERS SET FOR EXAMINATION IN POLITICAL ECONOMY I.
[# in Laughlin’s list of 310 questions (1884)]

1883-1884.

  1. Explain carefully the following terms: production, consumption, effectual demand, margin of cultivation, cost of production, value of money, cost of labor, wealth, and abstinence. [#2, virtually identical]
  2. What conclusion as to the limit to the increase of production does Mr. Mill deduce from his investigation of the laws of the various requisites of production? [#54]
  3. Explain clearly how it is possible for the land of a country which is all of a uniform fertility to pay rent. [#105]
  4. Point out distinctly the connection between the money wages of laborers in the United States and the productiveness of the soil. [#244]
  5. Explain the operation of the laws of value by which the relative prices of wool and mutton would be regulated. [#194]
  6. Why is it necessary to make any different statement of the laws of value for foreign than for domestic products? What is the cause for the existence of any international trade? [#199]
  7. (1) What is the true theory of one country underselling another in a foreign market? (2) What weight should be attributed to the fact of generally higher or lower wages in one of the competing countries? [#241]
  8. If capital continued to increase and population did not, explain the proposition that “the whole savings of each year would be exactly so much subtracted from the profits of the next and of every following year.” [#254, virtually identical]
  9. Give the arguments for and against the income tax. Would the tax on any kinds of income not fall upon the persons from whom it was levied? Explain.
  10. Define the term banking-reserve. What is the theory on which only a small part of the total resources is constantly kept as a reserve? What relation exists between the items of deposits, loans, and reserve?
  11. Explain the provisions of the Resumption Act, and show how the actual results were produced.
  12. Was the issue of greenbacks in February, 1862, an actual necessity?

 

1885-1886.

  1. Explain what is meant by the “standard of living” of the laboring class. In a densely populated country would the standard of living have any influence on the general rate of wages?
  2. Show clearly why there must be land in cultivation which pays no rent.
  3. Explain carefully the relation between Cost of Labor and Real Wages. How can an increase of population affect Cost of Labor?
  4. Under what conditions can it be said that normal value depends on the “expenses of production”? State the law of market and normal value for commodities affected by the law of diminishing returns.
  5. Explain the reason for the existence of foreign trade. Is there any different reason for the exchange of goods in domestic trade?
  6. What is inconvertible paper money? From the history of the United States notes state the main events showing the attitude of Congress towards their issue, while the notes were inconvertible.
  7. Why is a bank obliged to limit its loans when its cash reserve is seriously impaired?
  8. Why is it that the products of extractive industries are liable to great variations of market value?
  9. Upon whom would a tax on Rent fall? Would such a tax be a discriminating tax on the agricultural interests?
  10. What are the advantages of direct taxation? State by what kinds of taxation, direct or indirect, the United States gets its revenue.
  11. Is it correct to say that high wages alone prevent us from selling manufactured goods in foreign markets!

 

1886-1887.

  1. Compare the economic effects of defraying war expenditures by loans and by taxation. [#33, virtually identical]
  2. Does the rent of a factory building affect the value of the goods made in it? Does the rent of a farm affect the value of the grain grown on it? Does the rent paid for a lot near a great city, from which gravel is taken, affect the value of the gravel?
  3. It has been said that “the laws and conditions of the production of wealth partake of the character of physical truths. There is nothing optional or arbitrary in them.” State briefly the laws of the production of wealth here referred to, and whether the statement in regard to them is true.
  4. It has been said that the law of population and the law of diminishing returns from land point inevitably to misery and want as the destiny of the mass of mankind. What influence affecting the operation of these laws are to be taken into account; and if they are taken into account, are the laws of population and diminishing returns from land thereby shown to be invalid?
  5. Explain briefly the nature of the remuneration received by the following persons: a farmer tilling his own land; a merchant carrying on business with his own capital; a manufacturer carrying on business with borrowed capital; a holder of railway stocks; a holder of government bonds; a patentee.
  6. Wherein is the value of metallic money governed by different principles from those that regulate the value of commodities in general? And wherein is the value of inconvertible paper money governed by different principles from those that regulate the value of coin?
  7. Credit is said to be purchasing power. Explain what is meant by this proposition, and in what manner it bears on the theory of the value of money. Point out in what form credit, as purchasing power, is most likely to affect prices in the United States and in France.
  8. (a) Suppose that:
    In the U. S. one day’s labor produces 2 bushels of corn;
    In the U. S. one day’s labor produces 10 yards of cotton cloth;
    In England one day’s labor produces 1 bushel of corn;
    In England one day’s labor produces 5 yards of cotton cloth.
    Would trade arise between England and the United States? If so, how?
    (b) Suppose that in England one day’s labor produced 8 yards of cotton cloth, other conditions remaining the same as in (a). Would trade arise? If so, how?
    (c) Suppose that in England one day’s labor produced 2 yards of cotton cloth, other conditions remaining the same as in (a). Would trade arise? If so, how?
  9. Suppose a new article to appear among the exports of a given country. Trace the effects in that country on the course of the foreign exchanges; on the flow of specie; on the value of money; on the terms of international exchange. Would the results be the same if, instead of a new article of export, some article previously exported were to be sold abroad in larger quantity because of a lowering of its cost and price?
  10. (a) Arrange in proper order the following items of a bank account: Loans, $538,000; Bonds and Stocks, $40,000; Capital, $200,000; Real Estate, $26,000; other assets, $26,000; Surplus, $65,100; Deposits $440,000; Notes, $101,550; Cash, 124,000; Cash Items, $52,650.
    (b) Suppose the bank to discount four months paper (at 6 per cent) to the amount of $10,000 of which it purchases one-half by promises to pay the bearer on demand, and one-half by cash. How would the account then stand?
    (c) Suppose a borrower to have repaid a loan of $2000 by giving $1000 in cash, and $1000 in a cheque on the bank. How would the account then stand?
    (d) Suppose the bank to be confronted, in a time of general embarassment, with demands from depositors for cash, and from borrowers for discounts. What policy would be adopted if it were the Bank of England? if it were a United States national bank?

 

1886-1887.

DIVISION A.

  1. If taxes levied on the rich cause a diminution in their unproductive expenditure, would that in any way affect the employment offered for labor? Discuss fully.
  2. What principle does Mr. Mill furnish by which the respective shares of labor and capital are determined? Has his Wages-Fund Theory any connection with his exposition of the dependence of “profits” on Cost of Labor?
  3. In discussing the distribution of the product, why is it that the relative shares of labor and capital can be discussed independently of rent? Would an increase of rent affect the share of labor or of capital?
  4. Why is it that city banks make a greater use of the deposit liability than of the note liability? Why is the fact just the reverse with country banks?
  5. State fully the difference between Cost of Labor and Cost of Production. Would a decrease in Cost of Production affect Cost of Labor in any way?
  6. If the returns, and consequently wages, in our extractive industries were to decline, how would the course of our foreign trade probably be affected?
  7. Explain carefully how, and under what conditions, Reciprocal Demand regulates Normal Value.
  8. How do you reconcile the doctrine of comparative cost in international trade with the fact that a merchant regulates his conduct by a comparison of prices at home with prices abroad?
  9. Explain how a tax on “profits” may fall either (1) on the laborer, or (2) on the landlord.
  10. Discuss the argument that protection raises wages.
  11. Is the customs-duties on sugar economically justified?

 

DIVISION B.

  1. Suppose the price of silver to rise to such a point that the ratio of silver to gold would be 15 to 1, what change would take place in the money at present in use in the United States? Is such a change probable? if so, why? if not, why not?
  2. State the essential differences between the coinage acts of 1792, 1834, and 1878.
  3. “All experience has shown that there are periods when, under any system of paper money, however carefully guarded, it is impracticable to maintain actual coin redemption. Usually contracts will be based on current paper money, and it is just that, during a sudden panic or an unreasonable demand for coin, the creditor should not be allowed to demand payment in other than the currency in which the debt was contracted. To meet this contingency, it would seem to be right to maintain the legal tender quality of United States notes. If they are not at par with coin, it is the fault of the Government and not of the debtor, or rather it is the result of an unforeseen stringency not contemplated by the contracting parties.” From the Report of the Treasury, dated December, 1887.
    Under what circumstances was this passage written? Is the recommendation made by it a wise one? Has it been acted on?
  4. Ten men club together to buy flour at wholesale, each taking a part and paying his share of the price. Ten others club together, borrow money jointly, and lend it out to themselves for aid in carrying on their trades. A third ten club together, set up a work shop on joint account and work in it, and periodically divide the net proceeds. What kinds of cooperation are typified, respectively, by these proceedings? In what countries has each kind been most widely applied? Which seems to you to be of greatest intrinsic interest for the social question?
  5. What is meant by the eight-hour law? Wherein does it resemble, and wherein differ from, factory legislation in England?
  6. Compare the regulations of the Knights of Labor in regard to strikes with those of an English Trades-Union.
  7. “The present doctrine is that the workman’s interests are linked to those of other workmen, and the employer’s interests to those of other employers. Eventually it will be seen that industrial divisions should be perpendicular, not horizontal.” Explain what is meant by this passage; state by what devices it is endeavored to promote the ” horizontal ” and the “perpendicular” divisions, respectively; and give an opinion as to which line of division is likely to endure.
  8. The declaration of principles of Knights of Labor demands “the enactment of laws providing for arbitration between employers and employed, and to enforce the decision of the arbitrators.” Is it desirable to comply with that demand in whole, in part, or not at all?
  9. Suppose a tax were levied of ten per cent on the house-rent paid by every person, those who occupied their own houses being assessed for the letting value of their dwellings. Would such a tax be direct or indirect? Would it conform to the principle of equality of taxation? Give your reasons.

 

1887-1888.
Mid-year. 1888.

  1. Is productive consumption necessarily consumption of capital? Can there be unproductive consumption of capital?
  2. Distinguish which of the following commodities are capital, and, as to those that are capital, distinguish which you would call fixed capital and which circulating.
    A ton of pig iron; a plough; a package of tobacco; a loaf of bread; a dwelling-house.
    Can you reconcile the statement that one or other of these commodities is or is not capital with the proposition that the intention of the owner determines whether an article shall or shall not be capital?
  3. Suppose an inconvertible paper money to be issued, of half the amount of specie previously in circulation. Trace the effects (1) in a country carrying on trade with other countries, (2) in a country shut off from trade with other countries.
  4. Explain in what manner the proposition that the value of commodities is governed by their cost of production applies to wheat, to iron nails, and to gold bullion.
  5. Explain the proposition that rent does not enter into the cost of production. Does it hold good of the rent paid for a factory building? Of the rent paid for agricultural land?
  6. It has been said that wages depend (a) on the price of food, (b) on the standard of living of the laborers, (c) on the ratio between capital and population. Are these propositions consistent with each other? Are they sound?
  7. Suppose that
    One day’s labor in the United States produces 10 pounds of copper,
    One day’s labor England produces 8 pounds of copper,
    One day’s labor in the United States produces 5 pounds of tin,
    One day’s labor England produces 5 pounds of tin,
    Would trade arise between England and the United States, and if so, how?
    Suppose that, other things remaining as above, one day’s labor in England produced 12 pounds of copper, would trade arise, and if so, how?
  8. Explain what is meant when it is said that “there are two senses in which a country obtains commodities more cheaply by foreign trade: in the sense of value, and in the sense of cost.”
  9. Arrange in proper order the following items of a bank account: Capital, $300,00; Bonds and Stocks, $35,000; Real estate and fixtures, $20,000; Other assets, $20,000; Surplus, $80,000; Undivided Profits, $10,500; Notes, $90,000; Cash, $110,000; Cash items, $90,000; Deposits, $850,000; Loans, $1,050,000; Expenses, $5,500. ,
    Suppose loans are repaid to this bank to the amount of $100,000. One half by cancelling deposits, one quarter in its own notes, and one quarter in cash; how will the account then stand?
  10. What is the effect of the use of credit on the value of money? Wherein does credit in the form of bank deposits exercise an effect on the value of money different from that of credit in the form of bank notes?

 

Source: A Synopsis of the First Three Books of John Stuart Mill’s Principles of Political Economy, as revised by Prof. J. L. Laughlin with an appendix containing the recent examination papers in Political Economy I. Cambridge, Mass.: W. H. Wheeler, 1888.

Image Source: James Laurence Laughlin. University of Chicago Photographic Archive, apf1-03687, Special Collections Research Center, University of Chicago Library.

Categories
Exam Questions Harvard Suggested Reading Syllabus

Harvard. Outline and final exam. Economic and Political Ideas, Taylor. 2nd term, 1947-48

 

 

 

 

 

 

Overton H. Taylor described his book, A History of Economic Thought: Social Ideals and Economic Theories from Quesnay to Keynes (McGraw-Hill, 1960), as “an outgrowth from, or reduction to book form of, a part of the course of lectures, covering the same ground, which I have given annually for many years at Harvard University.”  This post provides the undergraduate course outline and final examination for the second half of his course that began with mercantilism and ended with New Deal liberalism and Keynesian economics.

Material from the first half of the course for the immediately following academic year (covering much the same material but stopping at the end of the 19th century) has been posted earlier:

Syllabus. Economics 115 (Fall Term, 1948-49). Economics and Political Ideas in Modern Times.

Final Exam. Economics 115 (Fall Term, 1948-49). Economics and Political Ideas in Modern Times

A much earlier version of the material for a one semester course has likewise been posted:

Syllabus. Economics 1b (Spring Term, 1940-41). The Intellectual Background of Economic Thought.

Final Exam. Economics 1b (Spring Term, 1940-41). The Intellectual Background of Economic Thought.

Greater emphasis on the economic theory was given in his graduate course:

Syllabus. Economics 205a (Fall Term, 1948-49). Main Currents of Thought in Economics and Related Studies over Recent Centuries.

In the Preface to his 1960 book Taylor described his purpose in writing as follows:

Perhaps I have a desire to be a ‘missionary’ in both directions–to convert as many noneconomist or lay readers as I can into interested students of economic theory and its history, and to convert more fellow-economists into interested students, also, of the diverse, general views or perspectives on all human affairs which formerly concerned all philosophical political economists.

 

________________________

 

Course Enrollment

[Economics] 15a. Dr. Taylor.—Economics and Political Ideas in Modern Times (F).

Total 100: 5 Graduate, 44 Seniors, 40 Juniors, 8 Sophomores, 1 Radcliffe, 2 Other.

 

[Economics] 15b. Dr. Taylor.—Economics and Political Ideas in Modern Times (Sp).

Total 33: 2 Graduates, 18 Seniors, 8 Juniors, 1 Sophomore, 2 Radcliffe, 2 Public Administration.

 

Source: 15a, Fall term ; 15b, Spring term: Harvard University. Report of the President of Harvard College, 1947-48, pp. 68, 89.

________________________

Economics 15b (115)
Spring Term, 1948
Outline

I. February 5 — 14. 17th Century Political Absolutism and Mercantilism. Liberalism.

Reading due February 14:

(1) Hobbes Leviathan, Chs. 1-6, incl.; 13, 14, 15, 17, 18, 21, 24;
(2) Locke, Civil Government II, Chs. 2, 3, 5, and 7-12, Incl.; and
(3) Gray, Economic Doctrines, Chs. 1-3.

Lectures

Th., Feb. 5, Introductory lecture about the course.

Sat, Feb. 7, Western civilization in the 17th Century, and the philosophy and political theory of Hobbes.

Tu., Feb. 10, Mercantilism and its economic theory.

Th., Feb. 12, 18th Century liberalism vs. political absolutism and mercantilism; and Locke’s theory of the free society.

Discussion

Sat., Feb. 14, Class discussion of the reading in Hobbes, Locke, and Gray.

II. February 17 — 28. 1705-1850. Foundations of the Classical, Liberal Theory of Political Economy.

Reading due February 28:

(1) Adam Smith, Theory of Moral Sentiments: Part I, sec. I, and Part II, secs. I, II or (1a) Selby-Bigge, British Moralists, Selection from A. Smith, Moral Sentiments;
(2) Adam Smith, Wealth of Nations, Book I, 1-7, incl.

Lectures

Tu., Feb. 17 Newton, Locke, and the 18th century’s vision of “the natural order.”

Th., Feb. 19 The philosophy and economic theory of the Physiocrats.

Sat., Feb. 21 Adam Smith’s philosophy, theory of morals and law, and economic theory.

Tu., Feb. 24 Hume and Bentham vs. natural law. Utilitarian liberalism.

Th., Feb. 26 Malthus and Ricardo. The classical theory of political economy.

Discussion

Sat., Feb. 28 Class discussion of the Adam Smith reading.

III. March 2 — 13. Early 19th Romantic and Positivistic Attacks and Alternatives.

Reading due March 13

(1) Spann, History of Economics, Chs. [no chapters given, but would appear to be Spann’s Chapter 8A of the 1930 translation “Types of Economic Theory”]
(2) Comte, Positive Philosophy, pp.[no pages given, but note Introd. Ch. 1; Book VI, 1, 2 were assigned by Taylor in his graduate course Econ 205a]
(3) J. S. Mill, Essays, Utilitarianism, and Liberty.

Lectures

Tu., March 2, The romantic movement and the anti-liberal reaction.

Th., March 4, Carlyle and Ruskin vs. the economists and utilitarians.

Sat., March 6, The romantic reaction in Germany, and types of political and economic thought it produced there.

Tu., March 9, August Comte’s philosophy, and critique of the classical, liberal economic theory.

Th., March 11, Early socialism; and J. S. Mill’s attempted synthesis.

Discussion

Sat., March 13, Class discussion of the Spann, Comte, and Mill reading.

IV. March 16 — 27. Marxism.

Reading due March 27:

Burns, Handbook of Marxism, Chs. [no chapters given here, but note Chs. 1, 13, 14, 22, 26, 29, 30 were assigned by Taylor in his graduate course Econ 205a]

Lectures

Tu., March 16, Antecedents and elements of Marxism: “utopian” socialism, Hegel’s philosophy of history, and Ricardo’s economic theory.

Th., March 18, Marx: theory of history.

Sat., March 20, Marx: economic theory of capitalism: value, wages, and profits.

Tu., March 23, Marx: theory of capitalism’s destined evolution and self-destruction.

Th., March 25, Marx: theory of the revolution and the new society.

Discussion

Sat., March 27, Discussion of the Marx reading.

March 28—April 4, Spring Recess

V. April 5 — 17. 1870-1914. Victorian Conservative Liberalism and Neo-Classical Economics.

Reading due April 17:

(1)  C. Brinton, English Political Thought in the 19th Century, Ch. III, Secs. 1, 2; IV, 1, 2, 3, 4; and
(2) A. Marshall, Principles of Economics, Book I, Chs. 1-3; III; IV, Chs. 1-3 and 8-13; and V, Chs. 1-5.

Lectures

Tu., April 5, The epoch and ideology of Victorian conservative liberalism.

Th., April 7, The renaissance and new ideas of liberal economic theory in this epoch. The discoverers of “marginal utility”—Jevons, the Austrians, Walras, and Marshall.

Sat., April 9, The market mechanism of the free economy and its equilibrium.

Tu., April 13, Marginal productivity and incomes; Clark and Carver.

Th., April 15, Alfred Marshall.

Discussion

Sat., April 17, Discussion of the political ideas of Brinton’s Victorians, and Marshall’s economics.

VI. April 20 — May 1. Present Day Ideologies and Economic Theory.

Reading due May 1:

(1) Sabine, History of Political Theory, Chs. 28 to end of book, omit 31;
(2) John Dewey, Liberalism and Social Action; and
(3) Beveridge, Full Employment in a Free Society, Part II, Sec. 2, and III through Sec. 5.

Lectures

Tu., April 20, Russian Communism versus Democracy and Liberal Capitalism or Liberal Socialism.

Th., April 22, Ideas of and about Fascism.

Sat., April 24, From 19th century to present day Liberalism.—continuity and contrast. The New Deal and the American tradition.

Tu., April 27, The economic theory of monopolistic competition, and liberal policy.

Th., April 29, “Keynesian” economic theory, and liberal policy.

Discussion

Sat, May 1, Discussion of the Sabine, Dewey, and Beveridge reading.

*  *  *  *  *  *  *  *  *

Reading Period
May 3—15, 1948

Economics 15b: Read one of the following:

Schumpeter: Capitalism, Socialism, and Democracy, Parts 1, 2, and 4.

Lionel Robbins: Nature and Significance of Economics.

 

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

________________________

1947-48
HARVARD UNIVERSITY
ECONOMICS 15b
[Final examination, May 1948]

Answer in all five questions, including 7a or 7b; and make one of your answers a one hour essay, so marked in your blue book.

  1. “Although the classical economists were free market liberals, the picture presented in their economic theory of the ‘natural’ working of the free market economy was not a picture of utopian perfection. They acknowledged a number of real flaws in the system. Then Marx, professing to build on but actually distorting the classical theory, exaggerated those flaws into evils held to be destined to destroy the system. And later the neo-classical economists, in opposition to Marx and in the effort to buttress laissez-faire more thoroughly, revised the old classical theory into one which appeared to support an unqualified optimism.”
    Explain and discuss each part of the statement. What flaws did old classical theory find in the system? What graver ones did Marx impute to it, and what were the chief similarities and differences between his and Ricardo’s doctrines in this connection? What novel concepts and doctrines in neo-classical theory contributed to its purer optimism; and how did they do so, and how legitimately?
  2. “The trouble with the free enterprise or free market economic system is that its long-run effects on a society’s culture and internally prevailing human attitudes, eventually destroy the kind of milieu which alone can enable this economic system to serve the general welfare, and survive. Where and as long as there is a real community, held together by a real moral consensus holding the competition of private interests within the bounds of mutual fair play, the free market system can develop and function well. But in time the growth of competitive, acquisitive ambitions and skills, in the mass of individuals and private groups, breaks through and dissolves the moral consensus and the bonds uniting the community. Competition then becomes warfare and anarchy, and coercive public controls must be developed to take the place, if possible, of the agreement in self-control by all severally, which has broken down.”
    What truth if any do you think is contained in this argument? What might be cited as some times of historical and contemporary evidence at least appearing to support it, and help convincingly in your judgment can it be thus supported? How might an economic theorist still thoroughly devoted to free-market liberalism, reply to the argument, and how if at all would you criticize his (best) reply to it?
  3. “The theory of monopolistic competition proves that, instead of harmonizing all private interests with the public interests, most actual business competition has characteristics which make the maximizing of private gains decidedly injurious to the economic welfare of society.”
    Explain and discuss. What characteristics of “most actual business competition” are referred to? Explain the proof of their socially undesirable consequences, and discuss any criticisms or limitations of this proof that you think may be valid. Do you think “decidedly injurious” is an overstatement? Why or why not?
  4. “Classical economics denied that there ever could be any deficiency of total demand for a full-employment output of the economy. Marx saw inevitable, chronic deficiency of total demand as one of the ‘internal contradictions’ bound eventually to destroy private capitalism. Keynes agreed with Marx about the deficiency, but, having a different theory of its causes, thinks it can be remedied by a simple type of governmental action within the capitalist framework.”
    Explain and discuss. How did the classical view support its denial of the possibility of deficient demand? Why is demand deficient according to Marx? Wherein does Keynes agree, and disagree with Marx? On what assumptions may the Keynesian remedy be held come consistent with retention of private capitalism; on what other assumptions, inconsistent with that?
  5. Describe and discuss all the main, admitted, and (in your opinion) likely ultimate, curtailment of individual freedoms in the Beveridge program for assuring “full employment in a free society.” Would you fear an eventual loss of virtually all freedom – “totalitarian” outcome – if the whole program were adopted in this country? Why or why not?
  6. Discuss the common and the divergent elements of the old classical liberalism, the liberalism of the Roosevelt New Deal, and the outlook of the average present day American exponent of “free enterprise.” As between our “New Dealers” and conservative “free enterprisers,” which group more nearly represents the main essentials of the older liberalism, in your opinion? Explain and defend your opinion on the last point carefully.
  7. (a) If you read Schumpeter in the reading period, explain and discuss his theory of the ways in which capitalism is preparing its own demise and the way for socialism.
    (b) If you read Robbins, state in your own words, and discuss critically, his definition of what economic science deals with and accomplishes.

 

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

Image source: O. H. Taylor in the Harvard Class Album, 1942.

Categories
Exam Questions Harvard

Harvard. General Examination in Macroeconomic Theory. Spring, 1991

 

We turn our attention now to relatively recent Macroeconomic Theory. The immediately preceding post provides a transcription of the Spring 1991 General Examination in Microeconomic Theory at Harvard.

This post represents the second artifact from the Abigail Wozniak collection of Harvard graduate economics general examinations from Spring 1991 through Spring 1999. Future installments will be posted, though not on a regular schedule. 

 From the different formatting and fonts seen in the original copies, we can conclude that Part I (questions 1-3), Part II (questions 4-6), Part III (questions 7-9) were each written by different sets of examiner(s). 

___________________________

HARVARD UNIVERSITY
DEPARTMENT OF ECONOMICS
ECONOMICS 2010d: FINAL EXAMINATION and
GENERAL EXAMINATION IN MACROECONOMIC THEORY
SPRING, 1991

Instructions for all Economics Department graduate students:

The examination will last four hours.

Answer all three parts of the examination (Parts I, II and III).
Within each part, answer any two of the three questions given (so that, in all, you will answer six questions).

Use a separate bluebook for each question. Clearly indicate the question number and your identification number on the front of each bluebook.

Do not indicate your name on any bluebook you submit.

 

Instructions for all other students:

The examination will last three hours.

Answer Parts II and III only. Within each part, answer any two of the three questions given (so that, in all, you will answer four questions).

Use a separate bluebook for each question. Clearly indicate the question number and your name on the front of each bluebook.

 

PART I

Question 1

“Old Keynesian” models were often criticized by their detractors for their apparent reliance on counter-cyclical real wages to generate fluctuations in output. Write a well crafted essay giving several examples of how more modern models (both Keynesian and non-Keynesian) have dealt with this issue. Explain the mechanism by which each model yields output fluctuations without counter-cyclical real wage fluctuations.

 

Question 2

Suppose that the simplest Lucas model describes the economy:

(1) {{y}_{t}}={{m}_{t}}-{{p}_{t}}+{{\nu }_{t}} , quantity theory in logs

(2) {{y}_{t}}=\alpha \left( {{p}_{t}}-{}_{t-1}{{p}_{t}} \right)+{{\varepsilon }_{t}} , Lucas supply function.

where t-1pt  represents the mathematical expectation as of period t-1 of the price in period t, and {{\nu }_{t}} and {{\varepsilon }_{t}} are i.i.d. disturbances.

Suppose, however, that private agents, in their ignorance, believe that the economy is described by (1) and:

(3) {{y}_{t}}=\beta \left( {{p}_{t}}-{}_{t-1}{{p}_{t}} \right)+{{\varepsilon }_{t}} , bogus supply function

where \beta \ne \alpha .

(a) Will this ignorance lead to any real effects of anticipated money under any of the following monetary policies? “Where relevant, assume the central bank knows that (2) is true but that people believe (3).)

(4.1)  {{m}_{t}}=\bar{m}+{{u}_{t}} , constant money supply

(4.2) {{m}_{t}}=\rho \left( {{m}_{t-1}} \right)+{{u}_{t}} , gradual adjustment

(4.3) {{m}_{t}}=-c\left( {{y}_{t-1}} \right)+{{u}_{t}} , lagged feedback rule

Here ut  is a random error, and 0<\rho <1.

(b) Now suppose agents make a different mistake. They think the supply function is

(5) {{y}_{t}}=\alpha \left( {{p}_{t}}-{}_{t-2}{{p}_{t}} \right)+{{\varepsilon }_{t}}

That is, they know the parameter, but get the lag structure wrong. Answer the same question again.

(c) Give a brief intuitive explanation of why you obtain different answers in parts (a) and (b).

 

Question 3

Consider the following simple growth model:

The economy is comprised of a single representative agent, who divides his labor between two activities. A fraction {{\theta }_{t}}  of labor is spent producing goods for consumption at time t, while a fraction 1-{{\theta }_{t}}  of labor is spent producing capital goods at time t.

Suppose that the production function for consumer goods is.

{{c}_{t}}={{\theta }_{t}}k_{t}^{\alpha },

where kt denotes the capital stock as of time t.

The evolution of the capital stock is given by,

{{k}_{t+1}}=\left( 1-\delta \right){{k}_{t}}+\left( 1-{{\theta }_{t}} \right)k_{t}^{\alpha }

where \delta  is the constant rate of depreciation, and 0<\alpha <1.

(a) If \theta   is constant for all t, what happens to kt as t\to \infty ? What happens to ct in the long-run equilibrium?

(b) Suppose that consumer preferences are given by,

\sum\limits_{t=0}^{\infty }{{{\beta }^{t}}}\ln {{c}_{t}},

Where 0<\beta <1 is the discount factor. What is the path for \left\{ {{\theta }_{t}} \right\} which maximizes utility?

Before calculating this algebraically, explain the basic trade-offs involved in selecting and optimal \theta . What must happen to {{\lim }_{t\to \infty }}{{k}_{t}}  under the optimal policy? Now using the first order conditions, derive an expression for the optimal time path of the ratio {{{\theta }_{t}}}/{{{\theta }_{t-1}}}\; . What happens to this ratio as t\to \infty .

(c) How does an increase in the depreciation rate \delta  or an increase in the discount factor \beta affect the long-run equilibrium fraction of labor engaged in consumer goods production. Interpret your answers.

 

PART II

Answer any two of the following three questions. Be sure to use a separate bluebook for each answer.

  1. Suppose that a nation’s government seeks to influence its level of aggregate demand so as to keep it as close as possible to the “full employment” level of output, which is determined independently of government actions. Suppose also that the government has two ways of affecting aggregate demand. Government spending closely and reliably influences aggregate demand; money growth also influences aggregate demand, but in a highly unpredictable manner. At the same time, there is a specific level of government spending that is deemed appropriate for reasons having nothing to do with its effect on aggregate demand; by contrast, the rate of money growth is of no consequence except insofar as it causes aggregate demand to be above or below “full employment” output. How can the government take account of these considerations in its conduct of fiscal and monetary policy?

 

  1. What aspects of economic behavior determine whether monetary policy should tighten, ease, or remain unchanged when the economy experiences an adverse shock affecting its aggregate ability to supply goods and services on the basis of given labor and capital inputs? Be specific about the policy objective that your answer assumes.

 

  1. Under what circumstances will a tax-and-transfer system intended to buffer the economy against shocks (of whatever origin) be unable to affect the distribution describing real economic outcomes? Show clearly that the set of assumptions you posit is sufficient for this “ineffectiveness” result. What are the major correspondences and contrasts between this set of assumptions and the conditions under which actual tax-and-transfer systems typically function in most industrialized economies? What conclusions do you draw from any contrasts?

 

Part III

Question 7

Consider the following model of a small open economy under flexible exchange rates:

I = I0 – r,
S = r,
X = R,
M = –R,
F = –\alpha  r, \alpha ≥ 0
[S– (G– T)] – I = X – M,
F = X – M,

Where I = domestic investment, S = domestic private saving, X = exports, M = imports, F = capital outflow, G = government spending, T = tax revenues, r = domestic real interest rate, and R = real exchange rate. I0 is a shift variable representing investment demand shocks, and \alpha  indexes the degree of international capital mobility (when \alpha =0 , capital is completely immobile; when \alpha =\infty , capital is perfectly mobile). In order to eliminate problems related to the negativity of some variables, think of all magnitudes as deviations from some unspecified values. The world interest rate is equal to zero. Domestic and foreign assets are perfect substitutes.

 

  1. Suppose that fiscal policy is exogenous, in the sense that

G – T = G0 – T0,   G0, T0 given.

What are the equilibrium effects of an investment shock (a change in I0) on national saving and investment? Is a positive investment-national saving relation an indicator of a lack of perfect capital mobility? Explain.

  1. Suppose now that fiscal policy is endogenous, in the sense that

G – T = [G0 + \beta(S – I)] – T0,   G0, T0 given.

where 0 < \beta  ≤ 1. Answer the same questions as in 1. Explain.

 

  1. Can the presence or lack of a crowding out effect of fiscal policy (resulting from changes in G0) be used to empirically discriminate between the exogeneous and endogenous policy hypotheses? Why or why not?

 

  1. Comment on the potential theoretical and empirical implications of this exercise.

 

Question 8

The “twin deficits” hypothesis asserts that U.S. Federal budget deficits are responsible for U.S. trade deficits.

  1. Present two models, one which supports and one which invalidates, this hypothesis.
  2. How could a proponent of the model which does not support the twin deficit hypothesis account for the recent coincidence of budget and trade deficits?
  3. How would you test empirically each of your proposed models?

 

Question 9

What are the effects on consumption and capital accumulation of i) a proportional labor income tax, and ii) a proportional capital income tax in:

  1. A life-cycle (overlapping generations) model;
  2. An economy with infinitely-lived consumers.

 

Source: Department of Economics, Harvard University. Past General Exams, Spring 1991-Spring 1999, pp. 89-94. Private copy of Abigail Waggoner Wozniak.

Image Source: View of Widener Library from Harvard Campus, Cambridge, Mass. from Boston Public Library, Tichnor Brothers Collection of Massachusetts Postcards.

Categories
Exam Questions Harvard

Harvard. General Examination in Microeconomic Theory. Spring, 1991

 

 

The following general examination in microeconomic theory (Spring 1991) comes from a collection of nine years’ worth of general exams at Harvard from the last decade of the 20th century shared by Abigail Waggoner Wozniak (Harvard economics Ph.D., 2005). Abigail Wozniak was an associate professor of economics at Notre Dame before she was appointed senior research economist and the first director of the Federal Reserve Bank of Minneapolis’ Opportunity & Inclusive Growth Institute. Economics in the Rear-view Mirror is grateful for her generosity in having a copy sent here for eventual transcription. 

The “Wozniak collection” is over 90 pages long, so it will take some time for all the exams to appear. But for now I can at least promise that the Spring 1991 macroeconomics examination will be posted soon.

______________________

HARVARD UNIVERSITY
DEPARTMENT OF ECONOMICS
GENERAL EXAMINATION IN MICROECONOMIC THEORY
SPRING, 1991

Instructions:

For those taking the generals in microeconomic theory:

  1. You have FOUR hours.
  2. Answer a total of five questions subject to the following constraints:
    at least two from Part A;
    at least one from Part B;
    exactly one from Part C.

For those taking the final exam in Economics 2010B, but not the generals:

  1. You have three hours and ten minutes
  2. Answer a total of four questions subject to the following constraints:
    at least two from Part A;
    do not answer any questions from Part B;
    at least one from Part C.

Please use a separate blue book for each question, and please put your name (or number) on each book.

Unless otherwise specified, the parts within each question will be equally weighted.

 

PART A (questions 1, 2,3)

  1. Consider an economy composed of a large number of consumers who differ in their tastes and endowment. The preferences of each individual are described by u={{x}^{\alpha }}{{y}^{\beta }}{{z}^{\left( 1-\alpha -\beta \right)}}, where \alpha ,\beta >0,\,\,\,\,\,\alpha +\beta <1 and endowments are \omega =\left( {{\omega }_{x}},{{\omega }_{y}},{{\omega }_{z}} \right)
    1. Write the excess demand function for good x and y as a function of the prices of the goods p= (px, py, pz), using a knowledge of the statistics of the distribution F.
    2. Find an expression for the equilibrium price system.
    3. Show that it is unique.
    4. Suppose that the price system p is out of equilibrium at time t = 0 and that for each commodity price adjusts proportionately to excess demand. The constant of proportionality dk>0 for k= x, y, z is known to be positive but is not known to you. Can you nevertheless be sure that the price system will converge to the equilibrium found in b)? Explain
  2. Consider a firm with production function f(x) which is uncertain about the price of its product p. This uncertainty is summarized in the distribution function G(p). The firm wants to maximize its expected profits. The workers of this firm, represented by their union, want to make a contract with the firm that will guarantee them a certain level of expected utility. The union’s von Neumann-Morgenstern utility function is u(c,x), where c is the total payment received by the union and x is the quantity of labor provided by the union to the firm.
    1. Show that a contract in which c and x are specified in advance of the firm’s learning p is worse than one in which c and x can be chosen after p.
    2. Assume that the realization of p from the distribution G is observable to both the firm and the union and that contracts c(p), x(p) specifying the payment and employment as a function of p are possible. Describe an optimal contract mathematically as it depends on f, u and G.
    3. Now suppose that only the firm can observe p and that it must propose a contract c(x) which gives the compensation level as a function of labor demanded, and that the firm retains the right to choose x (and hence c) after the value of p is known. Write the problem of finding an optimal contract. What are the constraints?
    4. Now suppose that there are only two possible prices p, call them pH,pL. Moreover, assume that x is a normal good in the union’s utility function. Show that the constraints found in part c are binding. Relative to an efficient situation, compare the value of the marginal product of labor to the marginal rate of substitution between x and c in the union’s utility function.
  3. Consider a region consisting of three towns in which a jail must be built. The towns are configured as shown below:

1

2

3
    1. The towns do not want the jail located in their borders. Moreover they do not want it in the town adjacent to themselves. Assume that utilities are quasi-linear, so that we can speak of the willingness to pay to avoid having the jail in or near a given town in units of money, which is transferable among the towns. Each town has a willingness to pay for avoiding having the jail in its borders of 10. Their willingness to pay for having it in an adjacent town are:
Town Willingness to pay to avoid jail in a neighbor
1 5
2 3
3 0

Where should the jail be located on efficiency grounds?  (.15)

    1. Assume that the towns could freely bargain about the location of the jail, and that they can make deals involving monetary compensation among themselves. Describe the set of such arrangements that are robust against defection or recontracting. (.60)
    2. Now assume that each town is populated by an identical number of citizens with identical utility functions such that their individual willingnesses to pay sum up to the town willingness to pay as given in part a. Could some type of competitive market be arranged to produce an efficient outcome? How would you organize it? (.25)

 

PART B (questions 4 and 5)

  1. There are two firms, an incumbent and a potential entrant. To produce at all, a firm must install at least ko units of capacity. The cost of capacity is q (>0) per unit. A firm that installs k units of capacity (k ≧ko) can produce up to k units of output. The marginal cost of output is c. Inverse demand is given by p = a – bx, where x is total output (the sum of the two firms’ outputs). The incumbent moves in period 1 and selects its capacity level kI. The entrant then moves in period 2 and either chooses not to enter or else selects a capacity kE. Finally, the two firms select output levels simultaneously in period 3. Subgame-perfect equilibrium is the solution concept.
    1. What level of capacity must the incumbent install in order to deter entry? (Note: you need just set up the equation; it is not necessary to solve it explicitly). Will the incumbent ever choose to install capacity that it does not use in equilibrium?
    2. If the incumbent chooses to accommodate entry, how much capacity will it install? Again, just set up the maximization).
    3. Under what conditions on the parameter values will the incumbent act to deter entry rather than accommodate it?
    4. Now suppose that demand is random and that the uncertainty is not resolved until the beginning of period 3.
      Specifically, suppose that inverse demand is a-bx+\varepsilon  or  a-bx-\varepsilon with equal likelihood where \varepsilon is “small”. Assume that firms are risk neutral. Does the uncertainty increase or decrease the capacity needed to deter entry? (It should not be necessary to perform any computations to answer this question).
  2. Suppose we are in a three commodity market. Good 3 is a numeraire and the demand functions for the other two goods are:

x1(p,w)= a1+ b1p1+ c1p2+ d1p1p2
x2(p,w)= a2+ b2p1+ c2p2+ d2p1p2

    1. Note that the demand for goods x1, x2 does not depend on wealth. Write down the most general class of utility functions whose demand has this property.
    2. Argue that if the above demand functions are generated from utility maximization then the values of the parameters cannot be arbitrary. Write down as exhaustive a list as you can of the restrictions implied by utility maximization. Justify your answer.
    3. Suppose that the conditions identified in (ii) hold. The initial price situation is
      p= (p1, p2) and we consider a change to p´= (p´1, p´2). Define the concept of consumer surplus generated in going from p to p´.
    4. Let the value of the parameters be
      a1= a2= ½ , b1= c2= -1, c1= b2= ½, d1= d2= 0. Suppose the initial price situation is p= (1,1). Compute the consumer surplus for a move to p´ for each of the following three cases: (1) p´= (2,1), (2) p´= (1,2), (3) p´= (2,2). Denote by CS1, CS2, CS3 the respective answers. Under which condition will you have CS3= CS1+ CS2. Discuss.

 

PART C  (questions 6 and 7)

  1. In both neo-Marxian and neo-Keynesian theories there is, to paraphrase Schumpeter, no growth without profit and no profit without growth. But the interaction between profit and growth is different in the two theories. What are the most important differences?
  2. Consider the problem of predicting the shots made by an expert billiard player. It seems not at all unreasonable that excellent predictions would be yielded by the hypothesis that the billiard player made his shots as if he knew the complicated mathematical formulas that would give the optimum directions of travel, could estimate accurately by eye the angles, etc., describing the location of the balls, could make lightning calculations from the formulas, and could then make the balls travel in the direction indicated by the formulas.
    It is only a short step from these examples to the economic hypothesis that under a wide range of circumstances individual firms behave as if they were seeking rationally to maximize their expect returns (generally if misleading called “profits”) and had full knowledge of the data needed to succeed in this attempt; as if, that is, they knew the relevant cost and demand functions, calculated marginal costs and marginal revenue from all actions open to them, and pushed each line of action to the point at which the relevant marginal coast and marginal revenue were equal. (Milton Friedman, “The Methodology of Positive Economics,” in Essays in Positive Economics, pp. 21-22).

What are the most important criticisms of Friedman’s position? What would be lost for economics, normative as well as positive, if the maximization hypothesis were abandoned?

 

Source: Department of Economics, Harvard University. Past General Exams, Spring 1991-Spring 1999, pp. 84-88. Private copy of Abigail Waggoner Wozniak.

Image Source: Abigail Wozniak webpage at the University of Notre Dame.

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

M.I.T. National Income and Employment Theory. Readings and Final Exam. Domar, 1960-61

 

 

For this post I have transcribed Evsey Domar’s graduate core macroeconomics course outline/reading list along with the questions for the final examination from the first term of the 1960-61 academic year at M.I.T. Students from both course XIV (economics) and XV (management) took this course.

Note: Evsey Domar distributed a questionnaire to the students to obtain feedback on his course.  The next post provides the results from that survey. It is fairly apparent that Domar did not cover the last topic on the course reading list (economic growth).

Final exam grade distribution (50 exams)

A 16%
A- 12%
B+ 10%
B 20%
B- 14%
C 18%
D 8%
F 2%

Fun Fact. Among the students enrolled in the course and who took the final examination: Michael D. Intriligator, Peter A. Diamond, Ann Fetter Friedlaender, and Stephen Goldfeld.

The much expanded course reading list/bibliography and  both the midterm and final examinations from the 1965-66 academic year have been posted earlier.

_________________________

MASSACHUSETTS INSTITUTE OF TECHNOLOGY

THEORY OF NATIONAL INCOME AND EMPLOYMENT
14.451 Reading List
E. D. Domar Fall Term 1960-61

The purpose of this list is to suggest to the student the sources in which the more important topics of the course are discussed from several points of view. His objectives should be the understanding of these topics and not the memorization of opinions and details.

Items marked with an * are strongly recommended. (I don’t like to use the expression “required” in a graduate reading list.)

No term paper will be required, but each student is expected, in addition to his general reading, to choose one of the eight major divisions of the course (except that Part VIII should not be taken without prior consultation with the instructor) as a field of concentration. A part of the final examination will be designed to test his broader knowledge of the chosen field.

 

I. NATIONAL INCOME AND RELATED ITEMS

*Kuznets, S., National Income and Its Composition, (New York, 1941), particularly Vol. 1, Chapter 1

*Jaszi, G., “The Statistical Foundations of the GNP,” Review of Economics and Statistics, Vol. 38, 1956)
Ruggles, R. and N., National Income Accounts and Income Analysis (New York, 1956)

*U.S. Department of Commerce, U. S. Income and Output, A Supplement to the Survey of Current Business, 1958

*National Bureau of Economic Research, The National Economic Accounts of the United States, Review, Appraisal and Recommendations, General Series 64, Washington, 1958

Ruggles, “The U.S. National Accounts,” American Economic Review, March, 1959
Organization for European Economic Co-operation, A Standardised System of National Accounts, Paris, 1952

Gilbert, M. and I. B. Kravis, An International Comparison of National Products and the Purchasing Power of Currencies, A Study of the United States, the United Kingdom, France, Germany and Italy, Organization for European Economic Cooperation, Paris, 1954

Nove, A., “The United States National Income A La Russe,” Economica, Vol. 23, 1956

Gilbert, M., Comparative National Products and Price Levels, A Study of Western Europe and the United States, Organization of European Economic Cooperation, Paris, 1958

*Leontief, W. W., “Output, Employment, Consumption and Investment,” Quarterly Journal of Economics, Feb., 1944

Leontief, W. W. The Structure of American Economy (New York, 1951)

*Dorfman, R., “The Nature and Significance of Input-Output,” Review of Economics and Statistics, Vol. 36, 1954

Stewart, I. G., “The Practical Uses of Input-Output Analysis,” Scottish Journal of Political Economy, Vol. 5, (Feb. 1958)

Dosser, D. and A. T. Peacock, “Input-Output Analysis in an Under-Developed Country: A Case Study,” Review of Economic Studies, Vol. 25, Oct. 1957

*Sigel, S. J., “A Comparison of the Structures of Three Social Accounting Systems,” National Bureau of Economic Research, Input-Output Analysis: An Appraisal, The Conference on Research in Income and Wealth, Studies in Income and Wealth, Vol. 18, pp. 253-89

Board of Governors of the Federal Reserve System, Flow of Funds in the United States 1939-53 (Washington, D. C., 1955)

 

II. GENERAL AGGREGATIVE SYSTEM

Students without prior training in this field are advised to study D. Dillard, The Economics of John Maynard Keynes (New York, 1948), A. H. Hansen, A Guide to Keynes (New York, 1953), or K. Kurihara, Introduction to Keynesian Dynamics (New York, 1956).

*Keynes, J. M., The General Theory of Employment, Interest and Money (New York, 1936)

*American Economic Association, Readings in Business Cycle Theory (Philadelphia, 1944), Essays 5, 7

Harris, S. E., The New Economics (New York, 1947), essays 8-19, 31-33, 38-46.

*Lerner, A. P., Economics of Control (New York, 1944), chapters 21-23, 25

*Kurihara, K. K., Post Keynesian Economics (New Brunswick, N. J., 1954), essays 1, 11*

*American Economic Association, Readings in the Theory of Income Distribution (Philadelphia, 1946), essay 24

Klein, L. R., The Keynesian Revolution, (New York, 1947), chapters 3-5.

Ellis, H. S., A Survey of Contemporary Economics (Philadelphia, 1948), Vol. 1, chapter 2

*Income, Employment and Public Policy, Essays in Honor of Alvin H. Hansen (New York, 1948), essay I

*Burns, A. F., “Economic Research and the Keynesian Thinking of Our Times,” in his The Frontiers of Economic Knowledge, (Princeton, 1954), or in the Twenty-Sixth Annual Report of the National Bureau of Economic Research, Inc. (New York, 1946). See also the discussion by Hansen and Burns in the Review of Economic Statistics, November, 1947

Dillard, D., “The Influence of Keynesian Economics on Contemporary Thought,” American Economic Review, Papers and Proceedings, 1957

Patinkin, D., Money, Interest, and Prices (Evanston, Ill., 1956).

 

III. THEORY OF INTEREST

Readings in the Theory of Income Distribution, essays 22, 23, 26

*Hicks, J. R., Value and Capital (Oxford, 1957), Chapters 11-12

Readings in Monetary Theory, essays 6, 11, 15

*Gurley, J. G., and E. S. Shaw, “Financial Aspects of Economic Development,” American Economic Review, September, 1955)

Hart, A. G., Money, Debt and Economic Activity, Second Ed., (New York, 1953)

Patinkin, D., “Liquidity Preference and Loanable Funds: Stock and Flow Analysis,” Economica, Vol. 25, November, 1958

Patinkin, D., Money, Interest, and Prices (Evanston, Ill., 1956).

*Lydall, H., “Income, Assets, and the Demand for Money,” Review of Economics and Statistics, Vol. 40, Feb. 1958

Lutz, F. A., “The Interest Rate and Investment in a Dynamic Economy,” American Economic Review, Dec. 1945

See also Section VI — INVESTMENT DECISIONS

 

IV. CONSUMPTION FUNCTION

*Duesenberry, J. S., Income, Saving, and the Theory of Consumer Behavior (Cambridge, Massachusetts, 1949)

Haley, B. F., A Survey of Contemporary Economics (Homewood, Illinois, 1952), Vol. II, essay 2

Davis, T. E., “The Consumption Function as a Tool of Prediction,” The Review of Economics and Statistics, August 1952

Heller, W. W., Boddy, F. M., and C. L. Nelson, Savings in the Modern Economy, a Symposium (Minneapolis, 1953)

*Friend, I., and S. Schor, “Who Saves?,” The Review of Economics and Statistics, Vol. 41, May, 1959, Part 2

*Friend, I., and I. B. Kravis, “Entrepreneurial Income, Saving and Investment,”American Economic Review, June, 1957, pp. 269-301

Zellner, Arnold, “The Short-Run Consumption Function,” Econometrica, (Oct. 1957

*Ferber, R., “The Accuracy of Aggregate Savings Functions in the Post-War Years,” Review of Economics and Statistics, Vol. 37, May, 1955

*Tobin, J., “On the Predictive Value of Consumer Intentions and Attitudes,” The Review of Economics and Statistics, Vol. 41, Feb., 1959

Dennison, E. F., “A Note on Private Saving,” Review of Economics and Statistics, August, 1958
Post-Keynesian Economics, essay 15

Friedman, M., A Theory of the Consumption Function (Princeton, N. J., 1957)

Friedman, M., and G. Becker, “A Statistical Illusion in Judging Keynesian Models,” Journal of Political Economy, Vol. 65, Feb., 1957

Klein, L. R., “The Friedman-Becker Illusion,” Journal of Political Economy, Vol. 66, Dec., 1958

Morgan, J. N., Consumer Economics (New York, 1955)

Katona, G., and E. Mueller, Consumer Expectations 1953-56 (Ann Arbor, Michigan, 1956)

Klein, L. R., ed., Contributions of Survey Methods to Economics (New York, 1954)

 

V. MULTIPLIER AND ACCELERATOR

*Kahn, R. F., “The Relation of Home Investment to Unemployment,” Economic Journal, 1931. Republished in Hansen and Clemence, Readings in Business Cycles and National Income (New York, 1953), essay 15

*Readings in Business Cycle Theory, essays 11-12

*Haavelmo, T., “Multiplier Effects of a Balanced Budget,” Econometrica, 1945; reprinted in Readings in Fiscal Policy, pp. 335-343

*Salant, William A., “Taxes, Income Determination, and the Balanced Budget Theorem,” The Review of Economics and Statistics, May, 1957

Peston, M. H., “Generalizing the Balanced Budget Multiplier,” and “Comment” by W. A. Salant, The Review of Economics and Statistics, August, 1958

Bowen, W. G., “The Balanced-Budget Multiplier: A Suggestion for a More General Formulation,” The Review of Economics and Statistics, May, 1957

*Kuznets, S., “Relation Between Capital Goods and Finished Products in the Business Cycle,” in Economic Essays in Honor of Wesley Clair Mitchell, (New York, 1935)

*Knox, A. D. “The Acceleration Principle and the Theory of Investment: A Survey,” Economica, Vol. 19, 1952

*Tsiang, S. C., “Accelerator, Theory of the Firm, and the Business Cycle,” Quarterly Journal of Economics, Vol. 65, 1951

*Tinbergen, “Statistical Evidence on the Acceleration Principle,” Economica, Vol. 5, 1938

Harrod, R. F., Towards a Dynamic Economics (London, 1948)

Hicks, J. R., A Contribution to the Theory of the Trade Cycle (Oxford, 1950)

Goodwin, R. M., “Problems of Trend and Cycle,” Yorkshire Bulletin, Vol. 5, August, 1953

Ott, A. E., “The Relation Between the Accelerator and the Capital Output Ratio,” Review of Economic Studies, Vol. 25, June, 1958

Minsky, H., “Monetary Systems and Accelerator Models,” American Economic Review, Vol. 47, 1957

See also VI — INVESTMENT DECISIONS.

 

VI. INVESTMENT DECISIONS

Lutz, F. A., and V., The Theory of Investment of the Firm (Princeton, 1951)

*Heller, W. W., “The Anatomy of Investment Decisions,” Harvard Business Review, March, 1951, pp. 95-103

*Pitchford, J. D. and A. J. Hagger, “A Note on the Marginal Efficiency of Capital,” The Economic Journal, Vol. 48, 1958

*Meade, J. E., and P. W. S. Andrews, “Summary of Replies to Questions on Effects of Interest Rates,” and “Further Inquiry into the Effects of Rates of Interest,” Oxford Economic Papers, No. 1, 1938 and No. 3, 1940

*Ebersole, J. F., “The Influence of Interest Rates,” Harvard Business Review, Vol. 17, 1938, pp. 35-39

*Henderson, H. D., “The Significance of the Rate of Interest,” Oxford Economic Papers, October, 1938, pp. 1-13

Andrews, P. W. S., “Further Inquiry into the Effects of Rates of Interest,” Oxford Economic Papers, Feb., 1940, pp. 32-73

Sayers, R. S., “Business Men and the Terms of Borrowing,” Oxford Economic Papers, Feb., 1940, pp. 23-31

*White, W. H., “Interest Inelasticity of Investment Demand—The Case from Business Attitude Surveys Re-examined,” American Economic Review, Sept. 1956, pp. 565-587

Brockie, M. D., and A. L. Gray, “The Marginal Efficiency of Capital and Investment Programming,” Economic Journal, Vol. 46, December, 1956

White, W. H., “The Rate of Interest, the Marginal Efficiency of Capital, and Investment Programming,” Economic Journal, Vol. 48, March, 1958

Grey, A. L., and M. D. Brockie, “The Rate of Interest, Marginal Efficiency of Capital and Net Investment Programming: A Rejoinder,” Economic Journal, June, 1959

Spiro, A., “Empirical Research and the Rate of Interest,” Review of Economics and Statistics, Vol. 40 (February, 1958).

*Duesenberry, J., Business Cycles and Economic Growth (New York, 1958), Chapters 1-8

Meyer, John R., and Edwin Kuh, The Investment Decision (Cambridge, Mass., 1957)

Cunningham, N. J., “Business Investment and the Marginal Cost of Funds,” Metroeconomica, Vol. 10, August, 1958

Cunningham, N. J., “Business Investment and the Marginal Cost of Funds,” Part II, Metroeconomica, Dec., 1958

Wilson, T., “Cyclical and Autonomous Inducements to Invest,” Oxford Economic Papers, Vol. 5, 1953

Hirschleifer, J., “On the Theory of Optimal Investment Decision,” The Journal of Political Economy, Vol. 66, Aug., 1958

Lydall, H. F., “The Impact of the Credit Squeeze on Small and Medium Sized Manufacturing Firms,” Economic Journal, Vol. 47, Sept., 1957

*Penrose, E., “Limits to the Growth and Size of Firms,” American Economic Review Papers and Proceedings, May 1955, pp. 531-43

Friend, I., and J. Bronfenbrenner, “Business Investment Programs and Their Realization,” Survey of Current Business, December, 1950

*Foss, M. F., and V. Natrella, “Ten Years’ Experience with Business Investment Anticipations,” Survey of Current Business, January, 1957

*Foss, M. F., and V. Natrella, “Investment Plans and Realizations—Reasons for Differences in Individual Cases,” Survey of Current Business, June, 1957

See also III—THEORY OF INTEREST and V—MULTIPLIER AND ACCELERATOR

 

VII. PRICE FLEXIBILITY AND EMPLOYMENT

*Pigou, A. C., “The Classical Stationary State,” Economic Journal, Dec., 1943

*Lange, O., Price Flexibility and Employment (Bloomington, Indiana, 1944)

*Friedman, M., “Lange on Price Flexibility and Employment,” American Economic Review, Sept., 1946

Readings in Monetary Theory, Essay 13

Schelling, T. C., “The Dynamics of Price Flexibility,” American Economic Review, Sept. 1949

Patinkin, D., Money, Interest, and Prices (Evanston, Illinois, 1956)

Hicks, J. R., “A Rehabilitation of ‘Classical Economics’,” Economic Journal, Vol. 47, June, 1957

*Power, J. H., “Price Expectations, Money Illusion and the Real Balance Effect,” Journal of Political Economy, Vol. 67, April, 1959

*Mayer, T., “The Empirical Significance of the Real Balance Effect,” Quarterly Journal of Economics, Vol. 73, May, 1959

 

VIII. THEORY OF GROWTH

*Domar, E. D., Essays in the Theory of Economic Growth (New York, 1957), Foreword, Essays I, III-V

Fellner, W., Trends and Cycles I Economic Activity, (New York,1956)

Hansen, A. H., Fiscal Policy and Business Cycles (New York, 1941)

*Harrod, R. F., Towards a Dynamic Economics (London, 1948), Part III

Leontief, W. W., Studies in the Structure of the American Economy, (New York, 1953)

Robinson, J., The Accumulation of Capital, (London, 1956)

*Kuznets, Simon, “Towards a Theory of Economic Growth,” R. Leckachman, ed., National Policy for Economic Welfare at Home and Abroad, (New York, 1955)

*Solow, R. M., “A Contribution to the Theory of Economic Growth,” Quarterly Journal of Economics, Feb. 1956, pp. 65-94

*Solow, R. M., “Technical Change and the Aggregate Production Function,” Review of Economics and Statistics, August, 1957, pp. 312-320

 

Source:  Duke University, David M. Rubenstein Library. Economists’ Papers Archives. Papers of Evsey D. Domar, Box 15, Folder “Macroeconomics, Old Reading Lists”.

 

_________________________

Economics 14-451
E. D. Domar

FINAL EXAMINATION—Three Hours
January 24, 1961

Please use a separate book for each question.

 

Part I—One Hour

Write an essay in the field of your concentration as instructed in class. Please be specific.

 

Part II—Two Hours

Answer the THREE questions which are furthest removed from the topic discussed in Part I. They carry equal weights.

  1. “Thus the rate of interest is what it is because it is expected to become other than it is: if it is not expected to become other than it is, there is nothing left to tell us what it is…”
    1. Can you identify the author of this famous statement?
    2. Can you recognize whose interest theory he referred to?
    3. Explain and evaluate that theory critically.
    4. Present your own (original or otherwise) theory of interest.
  2. Write an essay on the subject of “The treatment of intermediate products in:
    1. National Income and Product Accounting
    2. Input-output method
    3. Flow-of Funds system
    4. Federal reserve Index of Industrial Production.” (Don’t panic if you can’t do (d), but if you can you’ll get a premium.
      Hint: there is more in this question, and particularly in part (a) than meets the eye. Consider the whole rationale of the methods.
  3. Write a comprehensive essay on the subject of “The Rationale of Investment Decisions.” Consider as many cases as you can, but in each case specify clearly the assumptions made. (Don’t forget to include an undeveloped country case.) Can you generalize?
  4. Write a comprehensive and critical essay on the subject of “Price Flexibility and Employment.” Survey the relevant literature beginning with Keynes’ General Theory, and indicate clearly the nature of the assumptions, the definition of the concepts (hint: money), and the essence of the conclusions. What practical recommendations follow from your discussion?

 

Source: Duke University, David M. Rubenstein Library. Economists’ Papers Archives. Papers of Evsey D. Domar, Box 16, Folder “Macroeconomics, Final Exams”.

Image Source: Evsey D. Domar photo at the M.I.T. Museum website.

Categories
Exam Questions Harvard

Harvard. Mid-year exam. Principles of Money and Banking. Hansen and Williams, 1948-49.

 

Syllabi, reading assignments, bibliography and examinations for the Hansen-Williams money and banking course at Harvard have been transcribed and posted earlier for 1947-48; 1949-50. This post helps to fill the gap of course examinations.

____________________________

Enrollment

[Economics] 241 (formerly Economics 141a and 141b). Principles of Money and Banking. Professors Hansen and Williams.

(F) Total 73: 44 Graduates, 18 Public Administration, 1 MIT, 2 Juniors, 6 Radcliffe, 2 Others.
(S) Total 66: 43 Graduates, 15 Public Administration, 1 MIT, 4 Radcliffe, 3 Others.

Source: Harvard University. Report of the President of Harvard College, 1948-49, p. 78.

____________________________

1948-49
HARVARD UNIVERSITY
ECONOMICS 241a
Final Exam. January, 1949

PART I (Required)

Outline and discuss the current problems (relating to monetary and banking policy) disclosed, for example, in the last three Annual Reports of the Board of Governors of the Federal Reserve System. Among other things show why the current problems are different from those of the decades of

(a) the twenties
(b) the thirties.

PART II (Answer ANY THREE questions)

  1. Compare Wicksell and Keynes with respect to their theories of money and prices, showing, among other things, in what respects Keynes draws on the Wicksellian analysis and in what respects Keynes’s contribution is more complete.
  2. Write an essay on the monetary theories of any twoof the following:

(a) Robertson
(b) Hawtrey
(c) Hayek
(d) Fisher
(e) Marshall
(f) Henry Simons
(g) Lerner

  1. Explain by the aid of the modern theory of income determination the conditions under which monetary policy may be

(a) fully effective
(b) a necessary supplement to fiscal policy as means of raising real income and employment.

  1. Explain (by making use of the modern tools of analysis) the role of wages in the theory of price-level determination.

 

Source: Harvard University Archives. Final Examinations, 1853-2001. Box 16, Papers Printed for Final Examinations: History, History of Religions, …,Government, Economics, Anthropology,…, Naval Science. February, 1949.

Image Source: Alvin H. Hansen and John H. Williams in Harvard Class Album 1942.

Categories
Exam Questions Pennsylvania Syllabus

Pennsylvania. Theories of business cycles. Reading assignments and exam. Weintraub, 1954-55.

 

The following list of course reading assignments and final exam come from the first semester of Sidney Weintraub’s course at the University of Pennsylvania during the academic year 1954-55 that surveyed business cycle theories. There are an additional two pages of added readings in Weintraub’s papers but I accidentally missed copying the first page and will need to add that list later. 

I found a copy of the final exam for the second semester of the course, appended below, that reveals the more empirical emphasis of the second semester. Hopefully we will find a copy of the syllabus for the second semester.

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Brief Bio

Sidney Weintraub (1914-1983) was an American economist and a professor who specialized in the post-Keynesian school of economics. He was best known for his proposal to use the federal income tax to discourage wage and price inflation in a tax-based incomes policy (TIP). Raised in New York, Weintraub studied at the London School of Economics before being forced to return to the United States at the outbreak of World War II. He earned his Ph.D. from New York University in 1941, and began teaching economics at St. John’s University following the war. He joined the Wharton School at the University of Pennsylvania in 1950, where he remained for the rest of his career. Weintraub also founded and co-edited the Journal of Post Keynesian Economics.

Weintraub married Sheila Ellen Weintraub and had two sons, E. Roy and A. Neil Weintraub. E. Roy Weintraub is an economics professor at Duke University.

Source: Preliminary Guide to the Sidney Weintraub Papers. Duke University, David M. Rubenstein Rare Book and Manuscript Library, Economists’ Papers Project.

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ECONOMICS 612
Theories of Business Cycles
Fall Term 1954-55

Assignment Sheet

The first semester will be devoted to a study of theories of business fluctuations with readings largely confined to original sources. Classroom discussion will center upon the logical structure of the theories. The added references constitute suggestions for further reading on the specific topics but are not a prerequisite for the particular class session.

Session 1. Introduction: Early Cycle Theory.
Session 2. Underconsumption and Overinvestment theories.

a. Underconsumption theories: John Hobson, The Industrial System, pp. 39-54, 284-301;
W. T. Foster and W. Catchings, Profits, pp. 247-282, 398-421.

b. Overinvestment theories: A. Spiethoff, “Business Cycles”, in International Economic Papers(No. 3), pp. 75-81, 147-171;
Gustav Cassel, in Hansen and Clemence [H. and C.], Readings in Business Cycles, pp. 116-128.
Session 3. Psychological Impulse and Cumulative Propagation.

A.C. Pigou, Industrial Fluctuations, pp. 26-35, 72-98;
Albert Aftalion, in H. and C., Readings, pp. 129-138.
Session 4. Wesley Mitchell: Eclecticism and Quantitative Verification.

W. Mitchell, Business Cycles: The Problem and Its Setting, pp. 47-60, 376-378, 451-468 and pp. 150-165 in H. and C., Readings: “What Happens During Business Cycles,” pp. 6-12, 251-255.
Also, A. F. Burns, Frontiers of Economic Knowledge, pp. 187-198.
Read Schumpeter, Vol. I, Ch. 2
Session 5. Monetary Disequilibrium.

Warburton, [“The Misplaced Emphasis in Contemporary Business Fluctuation Theory”, in] Readings in Monetary Theory [1951].
R. G. Hawtrey, “The Trade Cycle”, pp. 330-349 in AEA Readings in Business Cycle Theory.
F. A. Hayek, Monetary Theory and the Trade Cycle, Ch. 3 and Prices and Production (2nded.) pp. 65-88.
Session 6. Swedish Contributions: The Cumulative Process.

K. Wicksell, “The Enigma of Business Cycles”, in International Economic Papers (Vol. 3), pp. 58-74.
J. R. Hicks, Value and Capital, pp. 283-302.
Session 7. Innovations and Investment Irregularity.

J. Schumpeter, pp. 1-19 in AEA Readings in Business Cycle Theory. (Also, Clemence and Doody, The Schumpeterian System, pp. 9-22, 95-101).
D. H. Robertson, pp. 166-174 in H. and C., Readings.
Session 8. Long Waves and Cycles.

N. Kondratieff, pp. 20-42 in AEA, Readings;
G. Garvy, pp. 438-466 in H. and C., Readings.
Session 9. J. M. Keynes: Income Levels and Cycles.

J. M. Keynes, General Theory, Ch. 22.
Session 10-11. Neo-Keynesian Theories.

J. R. Hicks, The Trade Cycle.
Session 12. Econometric Theories.

T. C. Koopmans, “The Econometric Approach to Business Fluctuations” AEA (Proc. May 1949).
Session 13. Economic Trends and Cycles.

S. Kuznets, Economic Change, pp. 125-144.
A. F. Burns, Frontiers, pp. 107-134.
Session 14-15. Contemporary Critiques of Cycle Theory.

R. A. Gordon, “Business Cycles: The Quantitative Historical Approach”, AEA(Proc. May 1949), pp. 47-63.
C. Warburton, “The Theory of Turning Points in Business Fluctuations”, QJE(Nov. 1950); see , [“The Misplaced Emphasis in Contemporary Business Fluctuation Theory”, in]  Readings in Monetary Theory.
A. Knox, “On a Theory of the Trade Cycle”, pp. 267-277 in H. and C., Readings;
N. Kaldor, “Economic Growth and Cyclical Fluctuations”, Economic Journal(Mar. 1954).

Source: Duke University. David M. Rubenstein Rare Book and Manuscript Library. Economists’ Papers Archive. Sidney Weintraub Papers, Box 19, Folder 1a “Miscellany Notes”.

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Final Examination.
Economics 612.
January 1955

Answer all questions.

  1. In which theories do you find the view that business cycles are chiefly a manifestation of capitalist growth? Explain the individual analyses and differences at some length.
  2. Referring to (1), indicate the theories in which the growth aspect is either ignored or denied, and the reasons for its suppression.
  3. Irving Fisher declared: “I see no reason to believe in “the” business cycle. It is simply the fluctuation about its own mean.” Discuss.
  4. Lloyd Metzler wrote: “Traditional theory usually assumed that the economic system is inherently unstable……” argue, pro and con.
  5. There have been several attempts to place causal emphasis on agriculture as the cycle-maker. Explain the major ones briefly. Prepare the strongest possible argument for the agricultural thesis.
  6. Wesley Mitchell placed substantial stress on the lag of retail prices behind wholesale prices, as well as the failure of wages to move synchronously with finished goods prices. Do you think that these divergent price movements are major cycle factors? Why?

Source: Duke University. David M. Rubenstein Rare Book and Manuscript Library. Economists’ Papers Archive. Sidney Weintraub Papers, Box 15, Folder 16 “Miscellany Notes”.

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Economics 612
Final Exam
June 3, 1955
11:00-1:30

Answer 3 out of 4

  1. a. Discuss the major conceptual and statistical limitations of the national income and product data published by the U. S. Department of Commerce.
    b. Describe and evaluate the National Bureau of Economic Research approach to the measurement and forecasting of business cycles.
  2. a. Discuss the major factors which might be expected to affect individuals’ saving and the relevant empirical evidence from cross-sectional data.
    b. Describe and appraise the major statistical relationships which have been developed to explain fluctuations or variations in individuals’ saving.
  3. Summarize and evaluate the empirical evidence on the factors determining the demand for (a) plant and equipment and (b) inventories.
    In your answer indicate briefly the economic rationale of the statistical relationships you refer to.
  4. a. Write out a system of equations which on the basis of experience to data you might utilize to forecast economic activity for the next year, indicating both limitations and possible future improvements.
    b. Discuss and evaluate the types of models developed by Lawrence Klein and others.

Source: Duke University. David M. Rubenstein Rare Book and Manuscript Library. Economists’ Papers Archive. Sidney Weintraub Papers, Box 19, Folder 1a “Miscellany Notes”.

Image Source: Gonçalo L. Fonseca’s The History of Economic Thought Website: biography of Sidney Weintraub.