Some Practice Interview Questions

Lots of students are preparing for their economics university interviews in the days ahead. Here is a selection of some of the questions I have been firing at my own students recently. There is no particular order of importance and they not designed to replicate what might be asked, they are simply the questions I like to ask to see if students have an understanding and a passion that goes beyond the mundane nature of AS and A2 courses. I usually throw in some logic and quantitative puzzles at the same time for variety!

1. Can George Akerlof’s famous study of the market for lemons be applied to the Euro Zone debt crisis?

2. If the Euro Zone is in such trouble, why isn’t the Euro depreciating rapidly against other currencies?

3. The base rate is 0.5%, UK 10 year bond yields are 2%, mortgages rate average 5%, overdrafts average 18% pa and some door-step loans have an annual percentage interest rate in excess of 2,000% How can these differences be explained?

4. Should the Bank of England raise interest rates from their current low level to 3% to increase aggregate demand?

5. Should the Bank of England abandon the idea of targeting inflation at 2%?

6. Is the phrase “expansionary fiscal contraction” a contradiction in terms?

7. House prices in Britain have fallen 10% from their peak in 2007. How should we react – delight or worry?

8. In modern economics, it is axiomatic that greater choice is beneficial. Is it in real life?

9. Which system would you prefer – voluntary blood donations or a market system that pays people for supplying their blood for transfusions?

10. In a game called the dollar bill auction, the players agree to auction a dollar bill with one-cent increments to the bids. The dollar goes to the highest bidder. The twist is that both the highest bidder and the second-highest bidder must pay. What is the likely result of this game?

11. Natural calamities are commonplace, and societies mostly cope with their effects. So why have we found it so hard to cope with the global financial crisis?

12. Why do senior executives insist on paying themselves so much? What if anything can and should be done about it?

13. What, if anything, distinguishes innovation from novelty?

14. What are more useful in organizations - teams or committees?

15. Does cost cutting in businesses increase their efficiency?

16. Should all forms of cooperative behaviour between businesses be made legal?

17. Are slums one of society’s greatest inventions?

18. Why is a schoolteacher in Switzerland paid much more than an Indian one?

19. If a schoolteacher in Britain was to be paid a bonus on successful completion of their students’ degree course, would that change their behaviour as teachers?

20. A complex piece of machinery like an oil rig or a nuclear reactor sometimes malfunctions. Is the British economy malfunctioning? Can it be repaired?

21. What are banks for?

22. Adidas says that it will produce a pair of Reebok trainers for $1 and sell them in India. (i) How can it do this? (ii) Is this a good deal for a rural Indian consumer?

23. Is a Tobin Tax an idea whose time has arrived?

24. Suppose 1,000 people each toss a coin once a year starting in 1995. After fifteen years (in 2010) what are the odds that a particular coin tosser would have tossed all heads? What are the chances that someone among the 1,000 who had started tossing coins in 1995 would have tossed all heads are much higher?

25. In a family with two children, if one of them is a girl called Michelle, what is the probability that both are girls?