Economics Today: A - Macroeconomics First Ca nadian Edition Roger Le...

SOLUTIONS

MANUAL

Mushtaq Ahmad George Sroka

Economics Today: A

Canadian Perspective, Macroeconomics First Ca nadian Edition Roger LeRoy Miller, Mushtaq Ahmad, James H igginson, L ia Rizzo, and George S roka 1 / 4

iii Table of Contents

1. The Nature of Economics (Appendix A: Reading and Working with Graphs)

• Scarcity and the World of Trade-Offs

3. Demand and Supply (Appendix B: Calculating Equilibrium Price and Quantity

Using Simple Linear Demand and Supply Equations)

4. Extensions of Demand and Supply Analysis (Appendix C: Consumer Surplus,

Producer Surplus with a Price System)

• Market Failures and the Public Sector

6. The Macroeconomy: GDP, Unemployment, and Inflation

• Measuring the Economy's Performance
• Global Economic Growth and Development
• Real GDP and the Price Level in the Long Run
• Classical Keynesian Macro Analyses

11. Consumption, Real GDP, and the Multiplier (Includes Appendix D: The

Keynesian Model and the Multiplier)

• Fiscal Policy (Includes Appendix E: Fiscal Policy: A Keynesian Perspective)
• Deficit Spending and the Public Debt
• Money, Banking, and Money Creation
• Bank of Canada and Monetary Policy (Includes Appendix F: Monetary Policy:

A Keynesian Perspective)

• Stabilization in an Integrated World Economy
• Policies and Prospects for Global Economic Growth
• Comparative Advantage and the Open Economy
• Exchange Rates and the Balance of Payments
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Copyright © 2023 Pearson Canada Inc.1 Chapter 1 The Nature of Economics  Answers to Questions for Critical Analysis

AI: DECISION MAKING THROUGH DATA

Why do you suppose that economists sometimes disagree about whether to classify as a microeconomic or macroeconomic endeavor the application of big data analytics to massive volumes of information encompassing virtually all of a nation’s industries and interactions among those industries?Because big data analytics uses such massive volumes of information, which can encompass virtually all a nation’s industries and interactions among those industries, it seems as if the endeavor is a macroeconomic application (large scale). However, in many cases, this big data just represents a small part of the economy, which could be perceived as a microeconomic application (individual scale or sub-scale).T

HE INCENTIVES TO ATTEND POST-SECONDARY EDUCATION (P. 7)

Sometimes adults tell young people to “get all the education you can get.” Does this mean that you should necessarily obtain an advanced degree?Under special circumstances, your answer to this Real Application question would be, yes. Those special circumstances would involve being able to obtain an advanced degree at zero cost to you and simultaneously not having any job opportunities as an alternative. Otherwise, you should look at how much more you would expect to earn per year if you complete an advanced degree program compared with what you could have earned working rather than spending more time in a university. Plus, you would have to consider the out-of-pocket costs of pursuing an advanced degree.A

SSESSING WHETHER CHARITABLE DONATIONS REFLECT CARING FOR OTHERS OR FOR

ONESELF

How might the fact that the Canadian government allows larger tax deductions for some charitable donations than for others, how would this affect Canadian taxpayers’ incentives about how much to donate and to whom they direct their donations?Canadian taxpayers are likely to donate to charities that will both help others and those in which will make them better off (either through a tax deduction or a charitable gift). If the government allows larger tax deductions for some charitable donations over others, taxpayers are likely to donate more to the charities where they receive a larger benefit (tax deduction).G

ETTING DIRECTIONS

In what way do small talk and gossip represent the use of simplifying assumptions?Gossip and small talk usually deal with other persons or situations of interest to the persons engaged in the conversation. Often the people who are talking choose to leave out details which they consider unimportant or information that do not support their position. The interpretation of the situation or the behaviour of the person being talked about will be affected by which details are omitted. 3 / 4

Solutions Manual for Roger LeRoy Miller • Economics Today, 1 st Canadian Edition Copyright © 2023 Pearson Canada Inc.2  Economics in Your Life

GOVERNMENT PROVIDES INCENTIVE PROGRAM FOR ZERO -EMISSION VEHICLES (ZEV).

For Critical Thinking Overall, does it appear that the incentive provided to purchase ZEV arise from the application of centralized command and control, the price system, or a mix of the two? Explain your reasoning.It appears that the government incentive provided to purchase ZEV is a mix of the two or a mixed economy. The market will determine what and how much ZEVs to produce. The government incentive or consumer subsidy will decrease the ZEV price and make the purchase more attractive to consumers.Real Application Assume that you decide to buy a ZEV. Should you take advantage of the incentive?Because the only cost to you, is your time to fill out the government application, you should definitely take advantage of the incentive. Assuming you comply with the government requirements you will benefit paying a lower price for your ZEV. Issues & Applications

WHY EDUCATION AND FINANCIAL INDEPENDENCE HELPS TO EXPLAIN WHY WOMEN ARE

DELAYING MARRIAGE AND WHY

FEWER WOMEN ARE MARRIED

For Critical Thinking Why do you think that the prevalence of marriages by women to higher-income-earning partners has remained relatively steady in recent years? (Hint: More higher-income-earning partners have completed more years of education and have more stable employment prospects than those who earn less.) The argument states that women choose to marry out of self-interest and will marry a partner that will be able to provide financially for the household. If women’s interests and actions do not change, then the prevalence of marriages to higher-income-earning partners should remain relatively steady.Real Application Currently, a larger percentage of women are obtaining advanced degrees than are men. What are some of the real-world implications of this trend with respect to marriage?Women with advanced degrees typically do not seek out spouses who have little or no education past high school. One might predict, that there will be a higher percentage of marriages among men and women who have advanced degrees. Answers to End-of-Chapter Questions 1-1. Define economics. Explain briefly how the economic way of thinking—in terms of rational, self-interested people responding to incentives—relates to each of the following situations.

• A student deciding whether to purchase a textbook for a particular class
• Government officials seeking more funding for mass transit through higher taxes
• A municipality taxing hotel guests to obtain funding for a new sports stadium
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