NETA Assessment: Test Bank to accompany Principles of Macroeconomics, Sixth Canadian Edition By N. Gregory Mankiw / Ronald D. Kneebone / Kenneth J. McKenzie

TABLE OF CONTENTS Part 1 Introduction Chapter 1 Ten Principles of Economics 1-1 Chapter 2 Thinking Like an Economist 2-1 Chapter 3 Interdependence and the Gains from Trade 3-1 Part 2 Supply And Demand: How Markets Work Chapter 4 The Market Forces of Supply and Demand 4-1 Part 3 The Data of Macroeconomics Chapter 5 Measuring a Nation’s Income 5-1 Chapter 6 Measuring the Cost of Living 6-1 Part 4 The Real Economy in the Long Run Chapter 7 Production and Growth 7-1 Chapter 8 Saving, Investment, and the Financial System 8-1 Chapter 9 Unemployment and Its Natural Rate 9-1 Part 5 Money And Prices in the Long Run Chapter 10 The Monetary System 10-1 Chapter 11 Money Growth and Inflation 11-1 Part 6 The Macroeconomics of Open Economies Chapter 12 Open-Economy Macroeconomics: Basic Concepts 12-1 Chapter 13 A Macroeconomic Theory of the Small Open Economy 13-1 Part 7 Short-Run Economic Fluctuations Chapter 14 Aggregate Demand and Aggregate Supply 14-1 Chapter 15 The Influence of Monetary and Fiscal Policy on Aggregate Demand 15-1 Chapter 16 The Short-Run Tradeoff between Inflation and Unemployment 16-1 Part 8 Final Thoughts Chapter 17 Five Debates over Macroeconomic Policy 17-1 4 Copyright © 2014 Nelson Education Limited. 1-1 Chapter 1—Ten Principles of Economics MULTIPLE CHOICE 1. Which word comes from the Greek word for “one who manages a household”? a. market b. consumer c. producer d. economy ANS: D PTS: 1 DIF: Easy REF: p. 3-4 BLM: Remember NOT: Macro TB_1-1 2. From which Greek word(s) is the word economy derived? a. environment b. one who manages a household c. one who participates in a market d. conservation ANS: B PTS: 1 DIF: Easy REF: p. 3-4 BLM: Remember NOT: Macro TB_1-2 3. What do households and economies have in common? a. They both must allocate scarce resources. b. They both face many decisions. c. They both must allocate the goods and services they produce. d. They both must have a central decision maker. ANS: D PTS: 1 DIF: Average REF: p. 3-4 BLM: Remember NOT: Macro TB_1-3 4. What concept does economics primarily deal with? a. scarcity b. poverty c. change d. power ANS: A PTS: 1 DIF: Easy REF: p. 4 BLM: Remember NOT: Macro TB_1-4 5. Which of the following is NOT included in the decisions that every society must make? a. what goods will be produced b. who will produce the goods c. what determines consumer preferences d. who will consume the goods ANS: C PTS: 1 DIF: Average REF: p. 4 BLM: Remember NOT: Macro TB_1-5 Copyright © 2014 Nelson Education Limited. 1-2 Test Bank Chapter 1 Macroeconomics Mankiw 6Ce 6.Why do both households and societies face many decisions? a. because resources are scarce b. because populations may increase or decrease over time c. because wages for households and therefore society fluctuate with business cycles d. because people, by nature, tend to disagree ANS: A PTS: 1 DIF: Average REF: p. 4 BLM: Remember NOT: Macro TB_1-6 7. When is a good considered scarce in a society? a. when more output of the good is possible b. when everyone in that society cannot have all they want of the good c. when the government restricts production of the good d. when only the richest people in the economy can buy all they want of the good ANS: B PTS: 1 DIF: Average REF: p. 4 BLM: Remember NOT: Macro TB_1-7 8. When does scarcity exist? a. when there is less than an infinite amount of a resource or good b. when society can meet the wants of every individual c. when there is less of a good or resource available than people wish to have d. when the government failsto produce goods ANS: C PTS: 1 DIF: Average REF: p. 4 BLM: Remember NOT: Macro TB_1-8 9. How are goods and services allocated in a market economy? a. by government decisions b. by giving each individual just enough for a decent standard of living c. by the actions of all firms and consumers d. by inherited rights and properties ANS: C PTS: 1 DIF: Average REF: p. 4 BLM: Higher Order NOT: Macro TB_1-9 10. Approximately what percentage of the world’s economies experience scarcity? a. 25% b. 50% c. 75% d. 100% ANS: D BLM: Remember PTS: 1 DIF: Easy NOT: Macro TB_1-10 REF: p. 4 11. What is the economy experiencing when a society cannot produce all the goods and services people wish to have? a. scarcity b. communism c. externalities d. market failure ANS: A