Lloyd Metzler’s Chicago graduate course Economics 370 covered monetary aspects of foreign trade. [ Economics 370 Reading List, 1950]. Today’s post adds the course examination of the fall quarter of 1953.
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Biographical Note
From the guide to the Lloyd A. Metzler papers at the University of Chicago archives.
Lloyd Appleton Metzler was born on April 3, 1913 in Lost Springs, Kansas. He attended the University of Kansas, where he studied economics under John Ise and earned a Bachelor’s degree in 1935 and an MBA in 1938. Metzler then entered Harvard University. He served as an instructor and tutor at Harvard and completed a Ph.D. in economics in 1942. His dissertation, “Interregional Income Generation,” earned him the Wells Prize. That same year, Metzler was the recipient of a Guggenheim fellowship.
From Harvard, Metzler went on to Washington, D.C., where worked for the Office of Strategic Services and several economic policy and planning commissions between 1943 and 1946. Metzler joined the research staff of the Board of Governors of the Federal Reserve System in 1944. In 1946 he returned to academia when he accepted a teaching position at Yale University. He soon left Yale for the University of Chicago in 1947, where he remained for the rest of his career.
Dr. Metzler survived surgery for a brain tumor in 1952, and with the help of his wife Edith, managed to continue teaching and writing for the next twenty years. He served as Editor of the Journal of Political Economy from 1966 until his retirement in 1971. Metzler made numerous contributions to business cycle literature, macro-monetary theory, tariff theory, mathematical economics, and the field of international trade. The Metzler paradox, Laursen-Metzler effect, and Metzler matrix, all bear his name. He died on October 26, 1980.
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ECONOMICS 370
Fall 1953
Examination, Dec. 18, 1953
Answer all questions.
(1) A given country has the following balance of payments:
| Payments | Receipts | ||
| Imports | 100 | Exports | 500 |
| Income Transfers (net) | |||
| …(1) Interest, Dividends, Profits | 50 | ||
| …(2) Unilateral Transfers | 150 | ||
| Capital Outflow | 200 | . . | |
| 500 | 500 | ||
Assuming that consumption and net investment amount to $5,000, indicate three ways in which national income may be defined. What is the significance of each definition?
(Note: if the numerical example troubles you, a definition of income in terms of broad categories, without numbers, will be quite satisfactory.)
(2) Discuss graphically the relations between the balance of trade and the flow of capital. Show, in particular, the circumstances under which the capital flow would adjust itself to a rather rigid balance of trade and the circumstances in which the balance of trade would adjust itself to a rigid capital movement. (In discussing these questions, you may make any assumptions you please as to the cause of the initial disturbance.)
(3) Suppose that two countries are on a flexible-exchange standard and that the exchange standard is so efficient that the supply of foreign exchange is for practical purposes equal to demand. Suppose, further, that the state of balance is temporarily disturbed by an outflow of capital from Country I to Country II—i.e., the capital flow schedule of Country I shifts to the right. Assuming that the banks do not destroy or create any new money, show, in the new equilibrium, what happens to prices, the exchange rate, and the rate of interest in each country. (You may assume, for this purpose that with the given supply and demand schedules, the capital outflow requires a level of prices and income in Country I just half as high, relative to prices and income in Country II as before.)
Contrast the conditions of equilibrium with those in a fixed-exchange system.
Source: Duke University. David M. Rubenstein Rare Book and Manuscript Library. Economists’ Papers Archive. Lloyd Appleton Metzler Papers, Box 9, Folder “Econ 371 Exams”.
Source Image: Posting by Margie Metzler on the Metzler Family Tree at the genealogical website, ancestry.com.