Categories
Exam Questions Johns Hopkins Suggested Reading Syllabus Undergraduate

John Hopkins. Economic Fluctuations and Fiscal Policy. Course outline, reading list, exams. Domar, 1956

Evsey D. Domar

Evsey Domar turned 42 years old towards the end of the Spring term of 1955-56 when he taught his intermediate fiscal policy course to Johns Hopkins’ undergraduates. From his papers at Duke’s Economists’ Papers Archive we can bring together the tightly focussed reading list, two midterm exams, and the final exam for Political Economy 4. 

One notes that the actual dates of the mid-term exams were lagged one week relative to the announced dates in the syllabus. Happens to the best of us. I wonder if students still (ever?) read the syllabus back in the middle of the 20th century. 

________________________

Course Announcement

Political Economy
Specialized intermediate work

Economic Fluctuations and Fiscal Policy 4. Professor Domar. Three hours weekly, second term.

The nature and causes of economic fluctuations. The economic role of government. Principal policy measures designed to achieve economic stability.

Prerequisite: Political Economy 3, or its equivalent.

Source: Johns Hopkins University. Undergraduate Programs, Announcements of Courses 1955-1956 in Circular 1955-1956. New Series 1955, Number 8, p. 102.

________________________

Course Outline and Readings

THE JOHNS HOPKINS UNIVERSITY
ECONOMIC FLUCTUATIONS
AND FISCAL POLICY
(Political Economy 4)

E. D. Domar
Spring Term 1955-56

Course Schedule

SOURCES:

On College Reserve:

Colm, Gerhard, Essays in Public Finance and Fiscal Policy, Oxford University Press, New York 1955.

Due, John F., Government Finance—an Economic Analysis, Richard D. Irwin, Inc., Homewood, Ill., 1954.

Gordon, Robert A., Business Fluctuations, Harper & Brothers, New York, 1952.

Lindholm, Richard W., J. J. Balles, J. M. Hunter, Principles of Money and Banking Related to National Income and Fiscal Policy,W. W. Norton & Co., New York, 1954.

Public Finance and Full Employment, published by the Board of Governors of the Federal Reserve System, Washington, 1945.

Ritter, Lawrence S., Money and Economic Activity, Houghton Mifflin Co., Boston, 1952.

To Be Acquired by the Students:

Maxwell, James A., Fiscal Policy, Henry Holt & Co., New York, 1955.

Economic Report of the President, January 1956.

SCHEDULE:

Week of February 13th:

Maxwell, Ch. 1,
Ritter, pp. 20-36
Lindholm, pp. 17-31.

Week of February 20th:

Ritter, pp. 99-113,
Maxwell, Ch. 2.

Week of February 27th:

Ritter, pp. 120-130,
Lindholm, pp. 330-348

Week of March 5th:

Lindholm, pp. 370-408.

HOUR EXAMINATION: March 12th

Week of March 12th:

Maxwell, Ch. 3, 4 & 5.

Week of March 19th:

Maxwell, Ch. 6, 7, & 8,
Federal Reserve, pp. 1-21,
Colm, pp. 188-219.

Week of March 26th:

Maxwell, Ch. 9, 10, & 11,
Colm, pp. 258-286.

Week of April 2nd:

Maxwell, Ch. 12 & 13,
Federal Reserve, pp. 22-52,
Review – Due, pp. 29-61, 427-39.

Week of April 9th:

Maxwell, Ch. 14 & 15.

HOUR EXAMINATION: April 16th

Week of April 16th:

Federal Reserve, pp. 53-68, 101-130.

Week of April 23rd:

Review – Gordon, Ch. 13 & 14, and pp. 559-74.

Week of April 30th:

Gordon, Ch. 16, 17 & 18.

Week of May 7th:

Economic Report of the President

Week of May 14th:

Economic Report of the President

Week of 21st:

General Review of the Course

Source: Duke University. David M. Rubenstein Rare Book and Manuscript Library. Economists’ Papers Archive. Papers of Evsey Domar. Box 15, Folder “MacroEconomics, Old Reading Lists”.

________________________

First Hour Test

THE JOHNS HOPKINS UNIVERSITY
Economic Fluctuations and Fiscal Policy
(Political Economy 4)
Spring Term 1955-56

March 19, 1956

E.D. Domar

Answer all questions in any order you wish. Indicate carefully every step in your reasoning.

  1. (40%) Write a comprehensive essay on the subject of “Central Bank Monetary Policy” with special reference to our Federal Reserve System. Your essay should include the following points:
    1. The structure of the Federal Reserve System.
    2. The relation between commercial and Federal Reserve Banks.
    3. Objectives of Federal Reserve Policy.
    4. Powers given to the Federal Reserve System and methods used by it to achieve the objectives indicated in (3) under different economic conditions.
      1. General measures
      2. Selective measures
    5. Evaluate the performance of the Federal Reserve System since its inception.
      How successful has it been in achieving the objectives stated in (3)?
    6. Conclusion: the virtues and defects of Monetary Policy.
  2. (25%) Indicate clearly how DEMAND DEPOSITS, REQUIRED RESERVES, EXISTING RESERVES and EXCESS RESERVES of the commercial member banks taken as a whole are affected by the following transactions.
    Assume that all payments are made by check, that the member banks add all receipts to, and subtract all amounts paid out from, their reserves with the Federal Reserve Banks, and that the U.S. Treasury keeps all its funds with the Federal Reserve Banks:
  3. 25% Legal requirements are 15 per cent.
  4. When a transaction consists of several parts, indicate each part separately and then show the total effect.
    AFTER EACH TRANSACTION GIVE A BRIEF VERBAL ANALYSIS OF ITS ECONOMIC EFFECTS.

    1. The U.S. Treasury collects $15 million of corporate income taxes from the U.S. Steel Corporation and uses the proceeds to redeem a bond held by Mr. Smith who deposits the check with his bank.
    2. Same as (1), but the bond is held by the First National Bank.
    3. Jones borrows $1000 from the First National Bank. After a while he uses the proceeds to meet his payroll. His employees invest their earnings in Federal bonds.
    4. The U.S. Treasury sells bonds for $100 million to the public, and uses the proceeds to buy land for highway construction. The owners of the land deposit their checks at their banks. The Federal Reserve Banks buy $100 million worth of Federal bonds from (a) the public, and (b) commercial banks.
    5. The Federal Reserve Board changes reserve requirements from 20 to 18 per cent. (Assume that the amount of deposits outstanding equals to $100 billion.) Thereupon banks extend loans to their customers of $1 billion.
  5. (35%) Write a comprehensive essay on the subject of “The Identity and Divergence between Private and Social Cost.” Illustrate your discussion with examples. Why is this question important to the subject matter of our course and to economic policy in general. (No credit will be given for vague generalities.)

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

________________________

Second Hour Exam

THE JOHNS HOPKINS UNIVERSITY
ECONOMIC FLUCTUATIONS
AND FISCAL POLICY
(Political Economy 4)
Spring Term 1955-56

Hour Examination
April 23, 1956

E.D. Domar

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

  1. (15%) Define and describe the following terms or expressions and indicate their use in economic discussions:
    1. The Multiplier;
    2. Parity;
    3. Balanced budget theorem;
    4. Cash vs. conventional budget;
    5. Carryovers and carrybacks;
    6. Income elasticity of taxation;
    7. Regressive taxation;
    8. Payroll taxes;
    9. Grants-in-aid;
    10. Accelerated depreciation.
  1. (20%) Write a comprehensive essay on the subject of “Built-in Flexibility as an Instrument of Fiscal Policy.” Explain what is meant by this expression, how this instrument works, how effective it is likely to be, and what can be done to increase its effectiveness. Give a critical evaluation. Be as comprehensive and specific as you can.
  2. (20%) Write a comprehensive essay on the subject of “The Agricultural Problem in the United States since the Second World War.” Explain the origin and causes of the problem, government policies which have been adopted, and their effectiveness in dealing with the problem. Indicate and justify your own recommendations.
  3. (30%) Analyze with great care all important economic effects of agricultural price support program on the assumption of (1) that the funds for this purpose are raised by borrowing, and (2) that they are raised by taxation, in both cases under conditions of (a) unemployment, and (b) full employment. Indicate in all cases what kind of borrowing and what kind of taxation you have in mind. Give examples. When would you recommend one or the other method?
  4. (15%) “The main objective of the Federal policy should be not the balancing of the Federal budget, but of the national economic budget.” Comment.

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

________________________

Final Exam

THE JOHNS HOPKINS UNIVERSITY
ECONOMIC FLUCTUATIONS
AND FISCAL POLICY
(Political Economy 4)

FINAL EXAMINATION – Three hours
June 1, 1956

E. D. Domar

Answer all questions. Be specific.

  1. (25%) Compare and contrast monetary and fiscal policies as methods of achieving economic stabilization (reasonably full employment without inflation) in a growing society. Include (but don’t limit yourself to) the following points:
    1. The theoretical foundation of each;
    2. Methods used by each;
    3. Effects on distribution of income and wealth;
    4. Social and political effects;
    5. Their effectiveness and limitations.

Do they overlap? Can you work out a synthesis of both?

  1. (10%) Describe how business fluctuations spread internationally and discuss critically the various measures for insuring international stability that have been suggested.
  2. (15%) Suppose that sizable gold deposits were discovered in this country (a) in 1933 and (b) in 1955. Trace the economic effects of the mining of this gold as completely as you can, both on the American economy and on that of other countries.
  3. (20%) Describe the origin, functions and performance of the Council of Economic Advisers from its beginning.
    State and evaluate the basic economic philosophy and the major recommendations of the 1956 Economic Report of the President.
  4. (15%) “One of the first objectives of this Administration should be at least a partial repayment of the Federal Debt. To do otherwise is to undermine the integrity on which this Administration is founded, and to adopt a course which inevitably loads to higher taxes, inflation, the destruction of our national wealth and economic insolvency.” Comment fully.
  5. (15%) Discuss SAVING as an economic problem.

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

Image source: Duke University. David M. Rubenstein Rare Book and Manuscript Library. Economists’ Papers Archive. Papers of Evsey Domar, Box 18, Folder “Photographs Domar”. Copy also available at the MIT Museum website. Colorized by Economics in the Rear-view Mirror.