Exam (elaborations)

Solutions for Macroeconomics, 4th Canadian Edition by Hubbard (All Chapters included)

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Course
Macroeconomics

Institution
Macroeconomics

Complete Solutions Manual for Macroeconomics, 4th Canadian Edition by R. Glenn Hubbard, Anthony Patrick O'Brien, Apostolos Serletis, Jason Childs ; ISBN13: 9780137688319. (Full Chapters included Chapter 1 to 14). 1.Economics: Foundations and Models. 2.Trade-offs, Comparative Advantage and the Mar...

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Uploaded on December 5, 2023
Number of pages 164
Written in 2023/2024
Type Exam (elaborations)
Contains Questions & answers

solutions
manual
macroeconomics
4th canadian edition
4ce
hubbard
9780137688319
answer guide
end of chapter
exercises
problems
solutions manual

Institution Macroeconomics
Course Macroeconomics

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Solutions Manual

Macroeconomics
Fourth Canadian Edition

Glenn Hubbard
Columbia University

Anthony Patrick O’Brien
Lehigh University

Apostolos Serletis
University of Calgary

Jason Childs
University of Regina

Complete Chapter Solutions Manual
are included (Ch 1 to 14)

** Immediate Download
** Swift Response
** All Chapters included

,Contents

Chapter 1: Economics: Foundations and Models................................................. 1

Chapter 2: Trade-offs, Comparative Advantage, and the Market System ....... 9

Chapter 3: Where Prices Come From: The Interaction of Supply and Demand 16

Chapter 4: GDP: Measuring Total Production and Income ................................. 30

Chapter 5: Unemployment and Inflation ............................................................... 39

Chapter 6: Economic Growth, the Financial System, and Business Cycles ....... 53

Chapter 7: Long-Run Economic Growth: Sources and Policies .......................... 64

Chapter 8: Aggregate Expenditure and Output in the Short Run ...................... 77

Chapter 9: Aggregate Demand and Aggregate Supply Analysis ..................... 89

Chapter 10: Money, Banks, and the Bank of Canada ......................................... 100

Chapter 11: Monetary Policy .................................................................................. 112

Chapter 12: Fiscal Policy .......................................................................................... 127

Chapter 13: Inflation, Unemployment, and Bank of Canada Policy .................. 137

Chapter 14: Macroeconomics in an Open Economy.......................................... 147

Copyright © 2024
ii

, CHAPTER 1 | Economics: Foundations and Models
SOLUTIONS TO END-OF-CHAPTER EXERCISES

Three Key Economic Ideas
1.1
Learning Objective: Explain these three key economic ideas: People are rational; people
respond to incentives; and optimal decisions are made at the margin.

Review Questions
1.1 “People are rational” is the assumption that decision makers explicitly or implicitly weigh the benefits
and costs of each action and then choose an action only if the benefits are expected to outweigh the
costs. “People respond to incentives” means that consumers and firms consistently respond to
economic incentives. “Optimal decisions are made at the margin” means that most decisions are not
“all or nothing” but involve doing a little more or a little less of an activity. Therefore, the optimal
decision is to continue any activity up to the point where the marginal benefit equals the marginal
cost.

1.2 Scarcity is the situation in which unlimited wants exceed the limited resources available to fulfill those
wants. Economics is the study of the choices consumers, business managers, and government officials
make to attain their goals. Scarcity is central to the study of economics because scarcity requires
people to make choices about how to use their resources to best fulfill their wants.

Problems and Applications
1.3 As noted in the chapter, the economic incentive to banks is clear—it is less costly to put up with bank
robberies than to take these additional security measures. The marginal cost of adding the additional
security is greater than the expected marginal benefit.

1.4 a. Students face scarcity of time, like everyone else, and respond to the incentives of the teacher’s
grading system. Students have more incentive to direct their efforts into the parts of the course
that have the most weight in the grading system.
b. Too little weight on outside readings or the like gives students little incentive to read and master
the material. Students will put less effort into the parts of the course that have little effect on their
grades.
c. Quizzes over assigned readings would give students an incentive to come to class having read the
upcoming material. Some teachers give preparation assignments where students have to read and
answer questions about the upcoming material, and over the course of the semester students have
to successfully complete a certain percentage of the preparation assignments to qualify for an A,
or B, or other grade in the course.

1.5 The carbon price and the subsequent increase in the price of gasoline (and other carbon-intensive
products) will encourage people to use less gasoline. If people respond to the negative incentive of
higher gas prices by using less gas, maybe by taking the bus or buying a more fuel-efficient car, we
will emit fewer greenhouse gases and do less damage to the environment.

Copyright © 2024

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Exam (elaborations)

Solutions for Macroeconomics, 4th Canadian Edition by Hubbard (All Chapters included)

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