How many can pass this Prof. Milton Friedman’s exam on money and banking (1932)?

This blog had earlier pointed about a Harvard economics exam in 1953. Most reacted to the post wondering how many economics students and today’s economics pros can pass this exam today?

Similarly, Rear view mirror blog points through this post Prof Friedman’s exam on money and banking in 1932:

Write on any four questions.

  1. “The banks could either keep the demand for real capital within the limits set by the supply of savings or keep the price level steady; but they cannot perform both functions at once.” (Hayek) Discuss this statement critically
  2. “Only the purely static quantity theory needs no index number, for its comparisons assume relative prices to be unchanged inter se. The objections to Professor Fisher’s Equation of Exchange arise mainly from the faults of the price index implied in it.” (Hawtrey) Explain and evaluate this statement.
  3. The criticism is sometimes made of the quantity theory that it assumes other things to be equal, whereas in fact they are not. Discuss this criticism. What “other things” are referred to?
  4. Discuss the relation between the k of Keynes’ earlier equation and the velocity of circulation.
    b. Discuss the statement that changes in the velocity of circulation of goods cannot bring about changes in the price level because of the fact that they necessarily bring about compensating changes in the velocity of circulation of money.
  5.  According to Keynes’ analysis what would it be necessary to do in order to eliminate the business cycle? State and support your opinion of Keynes’ conclusion.

How many can pass this either? How many have even heard of these statements? Where is the equation/model here? It ain’t economics man!!

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