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First Prelim ECON 3040, Fall 2014 You have 1 hour and 15 minutes to finish the exam. I will answer questions for the first 15 minutes of the exam, after that no more questions of any type are allowed. Hence, read the exam thoroughly and fully before writing anything. The Exam will be graded using the points described in each question. There are 16 regular points, and 4 Bonus points. Bonus points can be rolled-over to another prelim. If you disagree with your grading of any of your answers, you can dispute your grade by sending me a written request making your case. After that we will arrange for you to drop off your exam for revision. At that point the whole exam will be graded again. Here are some conditions that you may find useful. •Break even condition, economy in efficiency units, 𝑠𝑠𝑠𝑠(𝑘𝑘) = (𝑔𝑔+𝑛𝑛+𝛿𝛿)𝑘𝑘where the LHS are savings and the RHS are uses of capital, technology growth + population + depreciation. •Golden Rule condition 𝑠𝑠′(𝑘𝑘) = (𝑔𝑔+𝑛𝑛+𝛿𝛿)(where 𝑠𝑠′(𝑘𝑘)is the marginal product of capital in efficiency units)