Student id. ..................................

School of Business and Economics

EXAMINATION Version:

Course : History of Economic Thought Code: EBC2153

Coordinator(s): K. Bosmans and T. van Veen

Date : Monday, 30 May 2016 Time: 13.00-16.00 hours

Location : MECC Westhal

Communications devices and watches are not allowed put them in your bag
(under your table) or on the floor, not within arms reach! Otherwise this
will be reported as possible fraud to the Board of Examiners.

Any changes to the examination after the official end of the examination will be reported as
possible fraud to the Board of Examiners.

Sanctions by the Board of Examiners on fraud or irregularities include such measures as:
- complete or partial voidance or annulment of the relevant examination;
- exclusion from participation or further participation of one or more examinations or
exams at the SBE for a period of time to be determined by the Board of Examiners, with
a maximum period of one year;
- termination of the students registration for the concerning study programme.

This examination consists of: (please check if you received all pages, before you start
answering)
# 3 Pages (Front page included)
# 10 Questions

You are allowed to make use of:

nothing

Norm:
In total you can receive 100 point for the exam. You pass the exam if you have gained at least
50 points.

Publication of the results: within 15 workdays

Procedure for objections:

The course coordinator will organize an inspection date and time

Particulars:

For each question we give an indication of how long a good answer would be in terms of
(fractions of) pages.

You have to hand in the entire examination set. It is not allowed to take
home, copy or photograph the examination or parts of it!

1
(0.5 page)

1. (10 points) Compare and contrast the views of Malthus and Ricardo on unemployment.

(0.75 page)
2. (10 points) Maybe the most famous idea of Adam Smith is that of the invisible hand.
How is this idea conventionally interpreted? Is this conventional interpretation correct?

(0.5 page)
3. (10 points) Jevons and Menger made an error that might be described as the mirror of
the error of the classical economists. Describe this error.

(0.75 page)
4. (10 points) Briefly explain the concepts productive forces, mode of production and
ideological superstructure. Describe the role of each of these concepts in Marx theory
of the development of history.

(1 page)
5. For each of the following thinkers, briefly describe one key idea that he contributed to
economics:
a. (2 points) Hume.
b. (2 points) Edgeworth.
c. (2 points) Bhm-Bawerk.
d. (2 points) Gossen.
e. (2 points) Bernoulli.

(1 page)
6. The Swedish Economist Knut Wicksell had made important contributions to economic
theory. We focus on his contribution to macroeconomics, in particular to the
determination of inflation. According to Sandmo, Wicksell proposed an alternative
explanation for inflation. Alternative means different than Fishers explanation.
a) How does Fisher explain inflation? (3 points)
b) How does Wicksell explain inflation? (Hint: Wicksell uses the natural rate of interest in
his theories). (3 points)

2
 c) Suppose that the money supply is exogenously determined and kept fixed by the central
bank. Will there still be a difference in the explanation of inflation between Fisher and
Wicksell? (4 points)

(0.75 page)
7. (10 points) Keynes focused very much on uncertainty. Economic agents face uncertainty
in life and this is much more important than his predecessors thought and claimed. List
two consequences (as discussed by Keynes) of the existence of uncertainty, for
macroeconomic theory and policy.

(0.75 page)
8. In macroeconomics, neutrality of money is a key theoretical debate. (Non)-neutrality of
money has important consequences for monetary policy. In the current debates about
the quantitative easing (QE) programs by the ECB (and the lack of QE by the ECB
immediately after the financial crisis started), different thoughts about neutrality of
money can still be traced.
a) Explain what is meant by neutrality of money. (4 points)
b) From the literature that you have studied, list two key economists who have been
engaged in this neutrality of money debate and elaborate on their point of view.
(6 points)

(0.75 page)
9. In his review of Post-Keynesian economics, Paul Davidson makes it quite clear that the
school is quite broad and difficult to define. Nevertheless, Post-Keynesian economics
share a common body of building blocks for their theories.
a) On what theory do Post-Keynesian economists react in particular (alternatively, what
theory do they criticize?) (3 points)
b) List 4 building blocks of Post-Keynesian theory and discuss the most important policy
consequence of these building blocks. (7 points)

(0.5 page)
10. (10 points) In his Nobel lecture, Akerlof claims that efficiency wage theories and menu
costs theories are examples of behavioural macroeconomics. Can you explain this point
of view?