Could you pass a 1950s Econ 1000 exam?

Principles of economics final exams set out, implicitly, the core of the discipline. Their questions are designed to test understanding of fundamental economics concepts; the ideas that are the foundation of economic analysis.

So when I came across Clifford L. James's Principles of Economics (first published in 1934; ninth edition in 1956), complete with final examination and answers, I scanned the exam. Download it here.  I wanted to know what the foundations of the discipline were 60 years ago, and how have they changed.

One thing that has not changed over the decades is that economics begins with scarcity and problems of resource allocation:

 

Scarcity is inevitable; people always face trade-offs. Knowing that, it's possible to guess that the correct answer to question 1 is true without knowing what an "economy of abundance" is. 

In the 1950s scarcity and resource allocation were analyzed with quite different tools. The approach was more institutional, as revealed by these questions:

 

The correct answers to the above questions are the ones that makes the United States sound good and the Soviet Union sound bad. Most introductory economics courses no longer discuss comparative economic systems. Today's texts are more likely to  contain analyses of minimum wages, carbon taxation, and so on. The authors all strive to be balanced and objective. But I wonder: in 60 years time, will today's exams seem as overtly political as this Cold War-era one does now?

From comparative economic systems, the 1950s economic exam makes a sudden switch to questions that sound more business-school:

Indeed, the 1950s exam is peppered with business-school type questions that would be unlikely to show up an econ 1000 final today, like these:

It's a reminder of how much territory economics has ceded to business schools over the decades. 

While econ 1000 has largely abandoned corporate finance, we've held on tight to those cost curves and production functions. These questions haven't changed in 60 years:

There are more but I won't bore you with them.

There is almost nothing in the 1950s exam about consumer choice. Indeed 1950s-style economics, at least as represented by the Clifford James' text, lines up reasonably well with a perception of economics that I frequently encounter, namely that it's all about business and profits and money.

Here are some of the money questions: 

The beliefs people have of what economists do are not wrong, they're just 60 years out of date.

Times change. It's interesting to go through the 1950s examination and try to identify the ones whose answers no longer correspond to what's in the answer key, like this one:

In the 1950s, the answer to question 52 was (3). Today I would have a hard time arguing that economics is more qualitative than quantitive.

Or this:

The answer in the answer key is (3). Although some might argue whether monopsony or competition best characterizes the labour market, it is make the case that the US labour markets are largely bilateral monopolies. 

Then there are these questions:

 

The correct answer to 72 is pretty obviously 3 - monetary plus fiscal policy can do better than either. But what about that causes of the business cycle question? The correct answer is apparently "2" but that's not obvious to me.

There's also this:

 The 1950s answer is true. What's the answer now? 

And finally, one last question:

The answer is still (3), notwithstanding current political debates.

 

Comments

[Kevin Milligan]

Thanks for posting this. I don't know I would have passed that exam!

I bought a 3rd edition Samuelson at the Trinity College book sale at U of T back in the 1990s. Inside was a McMaster U exam from 1957. I posted pictures on twitter here:
https://twitter.com/kevinmilligan/status/979475764893556736

I think the McMaster exam was much more clear and I understood most of the terms.

Feel free to capture those images I posted, or I'd be happy to send them by email.

[Frances Woolley]

Kevin - those images are great.

Samuelson's Economics first came out in 1948. The exam above is taken from a 1950s edition of a 1934 text. Even though the exam was probably been updated a bit over the years, I'd guess it has still has a lot of that original pre-Samuelson flavour. Comparing the the exam in this blog post with the exam you tweeted reveals something about how Samuelson changed economics - how after Samuelson "(3) qualitative, deductive, statistical" stopped being the correct answer.

It's not surprising we both find the Samuelson-type exam so much easier - we've only ever known post-Samuelson economics. And there's a reason for that - it was a beautiful, coherent, way of looking at the world.

[Jim Sentance]

Nothing to add to this other than gloating over my first edition Samuelson

[Frances Woolley]

Watch you don't spill that wine over it!

[Donald A. Coffin]

I'm old enough that some of that is weirdly familiar (not from textbooks I actually used--I took intro econ in 1966, but from the history of thought course I took). (In the US, one increasingly has to be old to have taken history of thought as an undergrad.) Obviously the micro-macro distinction had not yet taken hold.

Maybe I should put a few of those questions on the final I'm going to give in a month or so...or make it a part of the practice questions I give them.

[Irwin Collier]

For those with an interest in old econ syllabi, course readings and exams visit my blog Economics in the Rear-View Mirror: irwincollier.com

[Frances Woolley]

Irwin - that's a beautiful site - a real treasure trove of resources. I actually saw your post about Eva Mueller a couple of weeks ago, but didn't poke around the site more.
I've followed you on twitter now so I won't miss more of your posts.

Donald - I hadn't thought about the absence of a micro-macro distinction, but of course you're right!

[John Chant]

Samuelson's text was a revolution that came too late for me. My Econ. 100 teacher prescribed one of Samuelson's predecessors. Very, very descriptive and ponderous. I tried reading it once and that was it.

Yes Frances, surely Samuelson's text was a major force revolutionizing Economics. I wonder how much credit intellectual historians will give to a text book for revolutionizing a discipline.

We did have macro in 1954 - all out of Keynes's Treatise.

Tony Scott - not yet a Samuelson collaborator - first introduced me to modern economics but that was in third year.

[Frances Woolley]

John - fascinating!

[Nick Rowe]

Question 72 is interesting to me. It's an example where the consensus answer has changed a lot over time. And it depends on the exchange rate regime, especially for a small open economy with high capital mobility. And Canada has sometimes had fixed and sometimes flexible exchange rate. Under fixed exchange rates we would nowadays usually say the best answer is "fiscal policy". In the 1990's, until the Great Recession (though it wasn't really very "Great" in Canada, compared to 1982), the official answer was "monetary policy", where the Bank of Canada was responsible for controlling aggregate demand to hit the 2% inflation target, while fiscal policy was responsible for controlling the debt and micro stuff. "Both" became briefly the standard answer in the Recession, but now we seem to be back at "monetary".

It's not the sort of question I would ask as a multiple choice question. I would ask it as an essay question. "Explain whether monetary or fiscal policy or both should be used..."

There's the old joke about the old guy revisiting the economics department, and asking to see the most recent exam. "The questions are all the same as when I was a student!". "Yes, but the answers are all different". (It works better for macro.)

[Kaleberg]

"It's a reminder of how much territory economics has ceded to business schools over the decades."

This is a serious problem in economics today. We're constantly seeing arguments in which it is impossible to create a corresponding business balance sheet. The economists get one answer. People actually running businesses or households get another. At some point, economics has to make sense in terms of accounting. (I agree that accounting is a black art, but it is a useful black art.)

It's like the way biology has to be consistent with chemistry and chemistry has to be consistent with physics. It's very Mary Somerville.

[Frances Woolley]

Kaleberg: "This is a serious problem in economics today"

Causes? Are business schools colonizing economists' most lucrative territory, or are economists abandoning topics that we see as uninteresting? Or both? And if it is a serious problem, what's to be done?

[Richard]

I wouldn't call economics a 'science' until question 52's answer is a lot closer to 2.
There is too much crap related to rational choice and efficient market hypothesis which are not based on observations of how people REALLY work. Richard Thaler, Robert Shiller, et al. have a better (experimental and observational) handle on it.
Not to mention NOT including how banks actually work in an economy. Any Control Systems Engineer can tell you how instability (as in the Business Cycle) occurs in systems with a gain (obviously a bank - borrow newly created money with 10% down - a gain of 10)set too high interacting with time delays (how long does it take to build a commercial building?) exist. Again, no actual observation and study, just a hypothesis that doesn't work...