Economics in the Rear-View Mirror

Archival Artifacts from the History of Economics

Harvard. Undergraduate General Examination in Economics, 1957

by Irwin Collier 3 days ago

Other undergraduate Harvard divisional/departmental general exams that have been transcribed and posted earlier:

General Division Exam 1916

General Division Exam 1917

Division Exams 1939

Economics General Exam 1953

Economics General Exam 1956


[May 2, 1957]

(Three hours)

Please be sure to use a separate bluebook for each Section, noting on the cover of each book the numbers of the questions discussed therein, and HONORS or NON-HONORS.

(One hour)
Economic Analysis

All candidates answer ONE question.

  1. During the 1930’s many economists claimed that the economy was stagnant because of the high rate of saving. Today many of the same economists are claiming that an even higher rate of saving is essential for rapid economic growth. Are these pronouncements consistent? Explain your answer.
  2. A famous economist has claimed that: "Perfect competition is not only impossible but inferior to monopoly and oligopoly from the viewpoint of long-term economic progress." Comment on the relationships between different forms of competition and economic progress.
  3. "The principle goals of domestic economic policy are a) maintenance of full employment, b) price stability, c) growth of real income, d) efficient utilization of resources, e) equitable distribution of income. Measures aimed at the achievement of one of these goals may impede progress toward others." Discuss, in the light of that statement, some of the problems of expenditure, monetary, and tax policy.
  4. Classical, neo classical, Schumpeterian, Keynesian, and post Keynesian economists differ widely concerning what they consider to be the major factors governing the behavior of entrepreneurs with respect to investment decisions. Discuss the views of these authors on this matter and indicate your own views in the light of that discussion.
  5. In what sense can it be said that perfect competition leads to optimum allocation of resources?
  6. Socialists have always advocated "production for use instead of production for profit." What are the sources of profits and how do different types of profits aid or hinder the efficient operation of the economic system?

(Two hours)

All students are required to choose TWO of the four fields in Part II of this examination and to answer TWO questions in each selected field. Thus a total of four questions are to be answered in Part II with an allowance of a half hour per question.

A. Industrial Organization

  1. Describe briefly the market structure of some specific oligopoly industry. How does the behavior of a typical firm in that industry differ from what it would be under (a) pure competition, and (b) monopoly?
  2. If the patent system did not already exist, it would be necessary to invent it; and it would best be invented in more or less the same form as it now exists. Do you agree? Discuss.
  3. The recent development of trucking has radically changed the position of the railroads; it no longer makes sense to view them as a natural monopoly industry. Rate regulations and all that goes with them should be abandoned, and free competition among all carriers should be allowed to govern prices and service. Discuss.
  4. The only purpose which the Robinson-Patman Act serves is the protection of more costly channels of distribution from the competition of more efficient ones. It should be repealed, and distributive markets made subject to Sherman Act standards of competition. Discuss.

B. Labor Economics

  1. "I venture the estimate — which may be mistaken — that collective bargaining has accomplished more in this area of the workers’ human rights on the job than it has in raising real wages faster than they would have risen without it. And union pressure has presumably been one of a complex of factors leading to a growing realization on the part of employers that the safeguarding of such rights of the workers is an essential part of their function." (J. M. Clark, Economic Institutions and Human Welfare, 1957, p. 135). Do you agree or disagree with this judgment? What facts and argument can you develop to support your position?
  2. "It is of the essence of a union that it holds up considerations of fairness, health, security, etc., as against the requirements of the market, of efficiency and of profit maximization." (Adolf Sturmthal, Ed., Contemporary Collective Bargaining in Seven Countries, 1957, p. 327). Discuss this analysis of the impact of the union and its conflict with the requirements of the market.
  3. "The regular annual rounds of wage increases have been mainly responsible for keeping up the steam under prices. As things look today, wages are the key to the inflation problem." Henry C. Wallich, "Perils in the Inflation Psychology", New York Times, Magazine Section, January 20, 1957. Do you agree with the judgment of Professor Wallich?
  4. Unions may influence wages in the short run but in the long run wages, like any other price, are determined by the forces of supply and demand.

C. Economic History

  1. Did protective tariffs contribute to the industrial growth of the United States? Why or why not?
  2. Contrast the structural market development of the textiles, anthracite coal, bituminous coal, boot and shoe, and steel industries in the United States. Are any generalizations permissible from this experience?
  3. What are the implications of the so-called "managerial revolution" of the twentieth century for economic theory and policy?
  4. Evaluate the following statement: "Serious economic difficulties in American agriculture are indicated by the constant reduction in agriculture’s share in national income."

D. Money and Finance

  1. "Inflation is caused by too much money chasing too few goods." "The constant upward pressure on money wages exerted by trade unions is the cause of inflation." Discuss both statements.
  2. Discuss the short run (two or three years) effect on Gross National Product and its components of an increase in government purchases of goods and services with no change in tax rates.
  3. It has been alleged that the Federal Reserve System’s tight money policy helped to slow down the boom of 1955-56. Discuss the ways in which the tight money policy may have influenced the rate of growth of demand during that period.
  4. Discuss the possible conflicts between measures for external equilibrium (i.e. in the balance of payments) and internal equilibrium (i.e. non inflationary full employment) under various exchange systems.
  5. Ideally, the budgetary process should result in an allocation of expenditures such that the marginal benefit of expenditures is the same in all fields and equal to the marginal cost of taxation. To what extent can this rule actually be applied? How could the Federal budgetary process be improved to promote adherence to this principle?

Source: John F. Kennedy Presidential Library. John Kenneth Galbraith, Personal Papers. Box 528. Series 5. Harvard University File, 1949-1990. Folder "Tutorials. 9/17/51-9/57."

Posted by: Irwin Collier

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