NETA ASSESSMENT
h
Test Bank
h
tohaccompany
TesthBankhpreparedhb
yh ConstantinhColonesc
uh MacEwanhUniversity
,NETAhAssessment:hTesthBankhtohaccompanyhPrincipleshofhMacroeconomics,
SixthhCanadianhEdition
ByhN.hGregoryhMankiwh/hRonaldhD.hKneeboneh/hKennethhJ.hMcKenzie
TesthBankhpreparedhbyhConstantinhColonescu,hMacEwanhUniversity
NETAhcopyheditor:hFranceshRobinson
AvailablehonhInstructor’shResourcehCDhISBNh.h0-17-655440-8
COPYRIGHTh©2014hbyhNelsonhEducationhLtd.hNelsonhishahregisteredhtrademarkhusedhhereinhunderhlicence.
hAllh rightshreserved.
ForhmorehinformationhcontacthNelson,h1120hBirchmounthRoad,hToronto,hOntarioh M1Kh5G4.hOrhyouhcanhvi
sithourh Internethsitehathwww.nelson.com.
ALLhRIGHTShRESERVED.hNohparthofhthishworkhcoveredhbyhthehcopyrighthhereonhmayhbehreproducedhorhus
edhinh anyhformhorhbyhanyhmeans—
graphic,helectronic,horhmechanical,hincludinghphotocopying,hrecording,htaping,hwebh distributionhorhinforma
tionhstoragehandhretrievalhsystems—withouththehwrittenhpermissionhofhthehpublisher
ii
, TABLEhOFhCONTENTS
Parth1hIntroduction
Chapterh1hTenhPrincipleshofhEconomics 1-1
Chapterh2hThinkinghLikehanhEconomist 2-1
Chapterh3hInterdependencehandhthehGainshfromhTrade 3-1
Parth2hSupplyhAndhDemand:hHowhMarketshWork
Chapterh4hThehMarkethForceshofhSupplyhandhDemand 4-1
Parth3hThehDatahofhMacroeconomics
Chapterh5hMeasuringhahNation’shIncome 5-1
Chapterh6hMeasuringhthehCosthofhLiving 6-1
Parth4hThehRealhEconomyhinhthehLonghRun
Chapterh7hProductionhandhGrowth 7-1
Chapterh8hSaving,hInvestment,handhthehFinancialhSystem 8-1
Chapterh9hUnemploymenthandhItshNaturalhRate 9-1
Parth5hMoneyhAndhPriceshinhthehLonghRun
Chapterh10hThehMonetaryhSystem 10-1
Chapterh11hMoneyhGrowthhandhInflation 11-1
Parth6hThehMacroeconomicshofhOpenhEconomies
Chapterh12hOpen-EconomyhMacroeconomics:hBasichConcepts 12-1
Chapterh13hAhMacroeconomichTheoryhofhthehSmallhOpenhEconomy 13-1
Parth7hShort-RunhEconomichFluctuations
Chapterh14hAggregatehDemandhandhAggregatehSupply 14-1
Chapterh15hThehInfluencehofhMonetaryhandhFiscalhPolicyhonhAggregatehDemand 15-1
Chapterh16hThehShort-RunhTradeoffhbetweenhInflationhandhUnemployment 16-1
Parth8hFinalhThoughts
Chapterh17hFivehDebateshoverhMacroeconomichPolicy 17-1
iii
, PREFACE
Inhmosthpost-
secondaryhcourses,hahlargehpercentagehofhstudenthassessmenthishbasedhonhmultiple-
h choicehtesting.hManyhinstructorshusehmultiple-
choicehreluctantly,hbelievinghthathithishah methodologyhbesthusedhforhtestinghwhathahstuden
thremembershratherhthanhwhathshehorhhehhash learned.
NelsonhEducationhLtd.hunderstandshthathahgoodhqualityhmultiple-
choicehtesthbankhcanhprovideh thehmeanshtohmeasurehhigher-
levelhthinkinghskillshashwellhashrecall.hRecognizinghtheh importancehofhmultiple-
choicehtestinghinhtoday’shclassroom,hwehhavehcreatedhNETA—
theh NelsonhEducationhTeachinghAdvantagehprogram—
tohensurehthehvaluehofhourhhighhqualityhtesth banks.
ThehNETAhprogramhwashcreatedhinhpartnershiphwithhDavidhDiBattista,hah3MhNationalhTeach
ingh Fellow,hprofessorhofhpsychologyhathBrockhUniversity,handhresearcherhinhthehareahofhmu
ltiple-h choicehtesting.hNETAhensureshthathsubject-
matterhexpertshwhohauthorhtesthbankshhavehhadh traininghinhtwohareas:havoidinghcommon
herrorshinhtesthconstruction,handhdevelopinghmultiple-
h choicehtesthquestionshthath“gethbeyondhremembering”htohassesshhigher-levelhthinking.
AllhNETAhtesthbankshincludehDavidhDiBattista’shguidehforhinstructors,h“MultiplehChoicehTes
ts:h GettinghBeyondhRemembering.”hThishguidehhashbeenhdesignedhtohassisthyouhinhusingh
Nelsonh testhbankshtohachievehyourhdesiredhoutcomeshinhyourhcourse.
ThehTesthBankhforhPrincipleshofhMacroeconomics,hSixthhCanadianhEditionhhashbeenhrevise
dhforh CanadianhstudentshbyhConstantinhColonescu,hMacEwanhUniversity.hThehmultiple-
choiceh questionshwerehwrittenhandheditedhtohconformhtohNETAhguidelines,hwhichhempha
sizehtheh developmenthofhhigher-
orderhthinkinghandhtheheffectivehconstructionhofhquestions.hNETAh principleshofhquestionh
constructionhhelpheliminatehambiguity,harguablehanswers,hguesswork,h andhunconscioushc
ueshtohtest-
savvyhstudents,hresultinghinhahtesththathaccuratelyhreflectshstudenth understanding.hThehTe
sthBankhoffershoverh3510hquestions,hincludinghabouth2822hmultipleh choice,habouth362htr
ue/false,habouth162hproblems,handhabouth164hshorthanswerhquestions.
Inhadditionhtohprovidinghahvarietyhofhquestionshrelatedhtoheachhchapterhobjective,hthishtest
hbankh alsohemployshahserieshofhtagshthathcanhhelphdesignheffective,hbalancedhtestshbyhthe
4
h
Test Bank
h
tohaccompany
TesthBankhpreparedhb
yh ConstantinhColonesc
uh MacEwanhUniversity
,NETAhAssessment:hTesthBankhtohaccompanyhPrincipleshofhMacroeconomics,
SixthhCanadianhEdition
ByhN.hGregoryhMankiwh/hRonaldhD.hKneeboneh/hKennethhJ.hMcKenzie
TesthBankhpreparedhbyhConstantinhColonescu,hMacEwanhUniversity
NETAhcopyheditor:hFranceshRobinson
AvailablehonhInstructor’shResourcehCDhISBNh.h0-17-655440-8
COPYRIGHTh©2014hbyhNelsonhEducationhLtd.hNelsonhishahregisteredhtrademarkhusedhhereinhunderhlicence.
hAllh rightshreserved.
ForhmorehinformationhcontacthNelson,h1120hBirchmounthRoad,hToronto,hOntarioh M1Kh5G4.hOrhyouhcanhvi
sithourh Internethsitehathwww.nelson.com.
ALLhRIGHTShRESERVED.hNohparthofhthishworkhcoveredhbyhthehcopyrighthhereonhmayhbehreproducedhorhus
edhinh anyhformhorhbyhanyhmeans—
graphic,helectronic,horhmechanical,hincludinghphotocopying,hrecording,htaping,hwebh distributionhorhinforma
tionhstoragehandhretrievalhsystems—withouththehwrittenhpermissionhofhthehpublisher
ii
, TABLEhOFhCONTENTS
Parth1hIntroduction
Chapterh1hTenhPrincipleshofhEconomics 1-1
Chapterh2hThinkinghLikehanhEconomist 2-1
Chapterh3hInterdependencehandhthehGainshfromhTrade 3-1
Parth2hSupplyhAndhDemand:hHowhMarketshWork
Chapterh4hThehMarkethForceshofhSupplyhandhDemand 4-1
Parth3hThehDatahofhMacroeconomics
Chapterh5hMeasuringhahNation’shIncome 5-1
Chapterh6hMeasuringhthehCosthofhLiving 6-1
Parth4hThehRealhEconomyhinhthehLonghRun
Chapterh7hProductionhandhGrowth 7-1
Chapterh8hSaving,hInvestment,handhthehFinancialhSystem 8-1
Chapterh9hUnemploymenthandhItshNaturalhRate 9-1
Parth5hMoneyhAndhPriceshinhthehLonghRun
Chapterh10hThehMonetaryhSystem 10-1
Chapterh11hMoneyhGrowthhandhInflation 11-1
Parth6hThehMacroeconomicshofhOpenhEconomies
Chapterh12hOpen-EconomyhMacroeconomics:hBasichConcepts 12-1
Chapterh13hAhMacroeconomichTheoryhofhthehSmallhOpenhEconomy 13-1
Parth7hShort-RunhEconomichFluctuations
Chapterh14hAggregatehDemandhandhAggregatehSupply 14-1
Chapterh15hThehInfluencehofhMonetaryhandhFiscalhPolicyhonhAggregatehDemand 15-1
Chapterh16hThehShort-RunhTradeoffhbetweenhInflationhandhUnemployment 16-1
Parth8hFinalhThoughts
Chapterh17hFivehDebateshoverhMacroeconomichPolicy 17-1
iii
, PREFACE
Inhmosthpost-
secondaryhcourses,hahlargehpercentagehofhstudenthassessmenthishbasedhonhmultiple-
h choicehtesting.hManyhinstructorshusehmultiple-
choicehreluctantly,hbelievinghthathithishah methodologyhbesthusedhforhtestinghwhathahstuden
thremembershratherhthanhwhathshehorhhehhash learned.
NelsonhEducationhLtd.hunderstandshthathahgoodhqualityhmultiple-
choicehtesthbankhcanhprovideh thehmeanshtohmeasurehhigher-
levelhthinkinghskillshashwellhashrecall.hRecognizinghtheh importancehofhmultiple-
choicehtestinghinhtoday’shclassroom,hwehhavehcreatedhNETA—
theh NelsonhEducationhTeachinghAdvantagehprogram—
tohensurehthehvaluehofhourhhighhqualityhtesth banks.
ThehNETAhprogramhwashcreatedhinhpartnershiphwithhDavidhDiBattista,hah3MhNationalhTeach
ingh Fellow,hprofessorhofhpsychologyhathBrockhUniversity,handhresearcherhinhthehareahofhmu
ltiple-h choicehtesting.hNETAhensureshthathsubject-
matterhexpertshwhohauthorhtesthbankshhavehhadh traininghinhtwohareas:havoidinghcommon
herrorshinhtesthconstruction,handhdevelopinghmultiple-
h choicehtesthquestionshthath“gethbeyondhremembering”htohassesshhigher-levelhthinking.
AllhNETAhtesthbankshincludehDavidhDiBattista’shguidehforhinstructors,h“MultiplehChoicehTes
ts:h GettinghBeyondhRemembering.”hThishguidehhashbeenhdesignedhtohassisthyouhinhusingh
Nelsonh testhbankshtohachievehyourhdesiredhoutcomeshinhyourhcourse.
ThehTesthBankhforhPrincipleshofhMacroeconomics,hSixthhCanadianhEditionhhashbeenhrevise
dhforh CanadianhstudentshbyhConstantinhColonescu,hMacEwanhUniversity.hThehmultiple-
choiceh questionshwerehwrittenhandheditedhtohconformhtohNETAhguidelines,hwhichhempha
sizehtheh developmenthofhhigher-
orderhthinkinghandhtheheffectivehconstructionhofhquestions.hNETAh principleshofhquestionh
constructionhhelpheliminatehambiguity,harguablehanswers,hguesswork,h andhunconscioushc
ueshtohtest-
savvyhstudents,hresultinghinhahtesththathaccuratelyhreflectshstudenth understanding.hThehTe
sthBankhoffershoverh3510hquestions,hincludinghabouth2822hmultipleh choice,habouth362htr
ue/false,habouth162hproblems,handhabouth164hshorthanswerhquestions.
Inhadditionhtohprovidinghahvarietyhofhquestionshrelatedhtoheachhchapterhobjective,hthishtest
hbankh alsohemployshahserieshofhtagshthathcanhhelphdesignheffective,hbalancedhtestshbyhthe
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