NETA ASSESSMENT
ai
Test Bank ai
toaiaccompany
TestaiBankaipreparedai
bya i ConstantinaiColone
scua i MacEwanaiUniver
sity
,NETAaiAssessment:aiTestaiBankaitoaiaccompanyaiPrinciplesaiofaiMacroeconomics,
SixthaiCanadianaiEdition
ByaiN.aiGregoryaiMankiwai/aiRonaldaiD.aiKneeboneai/aiKennethaiJ.aiMcKenzie
TestaiBankaipreparedaibyaiConstantinaiColonescu,aiMacEwanaiUniversity
NETAaicopyaieditor:aiFrancesaiRobinson
AvailableaionaiInstructor’saiResourceaiCDaiISBNai.ai0-17-655440-8
COPYRIGHTai©2014aibyaiNelsonaiEducationaiLtd.aiNelsonaiisaiaairegisteredaitrademarkaiusedaihereinaiunderailicen
ce.aiAlla i rightsaireserved.
ForaimoreaiinformationaicontactaiNelson,ai1120aiBirchmountaiRoad,aiToronto,aiOntarioa i M1Kai5G4.aiOraiyouaican
aivisitaioura i Internetaisiteaiataiwww.nelson.com.
ALLaiRIGHTSaiRESERVED.aiNoaipartaiofaithisaiworkaicoveredaibyaitheaicopyrightaihereonaimayaibeaireproducedaiorai
usedaiina i anyaiformaioraibyaianyaimeans—
graphic,aielectronic,aioraimechanical,aiincludingaiphotocopying,airecording,aitaping,aiweba i distributionaioraiinfor
mationaistorageaiandairetrievalaisystems—withoutaitheaiwrittenaipermissionaiofaitheaipublisher
ii
, TABLEaiOFaiCONTENTS
Partai1aiIntroduction
Chapterai1aiTenaiPrinciplesaiofaiEconomics 1-1
Chapterai2aiThinkingaiLikeaianaiEconomist 2-1
Chapterai3aiInterdependenceaiandaitheaiGainsaifromaiTrade 3-1
Partai2aiSupplyaiAndaiDemand:aiHowaiMarketsaiWork
Chapterai4aiTheaiMarketaiForcesaiofaiSupplyaiandaiDemand 4-1
Partai3aiTheaiDataaiofaiMacroeconomics
Chapterai5aiMeasuringaiaaiNation’saiIncome 5-1
Chapterai6aiMeasuringaitheaiCostaiofaiLiving 6-1
Partai4aiTheaiRealaiEconomyaiinaitheaiLongaiRun
Chapterai7aiProductionaiandaiGrowth 7-1
Chapterai8aiSaving,aiInvestment,aiandaitheaiFinancialaiSystem 8-1
Chapterai9aiUnemploymentaiandaiItsaiNaturalaiRate 9-1
Partai5aiMoneyaiAndaiPricesaiinaitheaiLongaiRun
Chapterai10aiTheaiMonetaryaiSystem 10-1
Chapterai11aiMoneyaiGrowthaiandaiInflation 11-1
Partai6aiTheaiMacroeconomicsaiofaiOpenaiEconomies
Chapterai12aiOpen-EconomyaiMacroeconomics:aiBasicaiConcepts 12-1
Chapterai13aiAaiMacroeconomicaiTheoryaiofaitheaiSmallaiOpenaiEconomy 13-1
Partai7aiShort-RunaiEconomicaiFluctuations
Chapterai14aiAggregateaiDemandaiandaiAggregateaiSupply 14-1
Chapterai15aiTheaiInfluenceaiofaiMonetaryaiandaiFiscalaiPolicyaionaiAggregateaiDemand 15-1
Chapterai16aiTheaiShort-RunaiTradeoffaibetweenaiInflationaiandaiUnemployment 16-1
Partai8aiFinalaiThoughts
Chapterai17aiFiveaiDebatesaioveraiMacroeconomicaiPolicy 17-1
iii
, PREFACE
Inaimostaipost-
secondaryaicourses,aiaailargeaipercentageaiofaistudentaiassessmentaiisaibasedaionaimultiple-
a i choiceaitesting.aiManyaiinstructorsaiuseaimultiple-
choiceaireluctantly,aibelievingaithataiitaiisaiaa i methodologyaibestaiusedaiforaitestingaiwhataiaaistu
dentairemembersairatheraithanaiwhataisheaioraiheaihasa i learned.
NelsonaiEducationaiLtd.aiunderstandsaithataiaaigoodaiqualityaimultiple-
choiceaitestaibankaicanaiprovidea i theaimeansaitoaimeasureaihigher-
levelaithinkingaiskillsaiasaiwellaiasairecall.aiRecognizingaithea i importanceaiofaimultiple-
choiceaitestingaiinaitoday’saiclassroom,aiweaihaveaicreatedaiNETA—
thea i NelsonaiEducationaiTeachingaiAdvantageaiprogram—
toaiensureaitheaivalueaiofaiouraihighaiqualityaitesta i banks.
TheaiNETAaiprogramaiwasaicreatedaiinaipartnershipaiwithaiDavidaiDiBattista,aiaai3MaiNationalaiTea
chinga i Fellow,aiprofessoraiofaipsychologyaiataiBrockaiUniversity,aiandairesearcheraiinaitheaiareaai
ofaimultiple-a i choiceaitesting.aiNETAaiensuresaithataisubject-
matteraiexpertsaiwhoaiauthoraitestaibanksaihaveaihada i trainingaiinaitwoaiareas:aiavoidingaicomm
onaierrorsaiinaitestaiconstruction,aiandaidevelopingaimultiple-
a i choiceaitestaiquestionsaithatai“getaibeyondairemembering”aitoaiassessaihigher-levelaithinking.
AllaiNETAaitestaibanksaiincludeaiDavidaiDiBattista’saiguideaiforaiinstructors,ai“MultipleaiChoiceaiT
ests:a i GettingaiBeyondaiRemembering.”aiThisaiguideaihasaibeenaidesignedaitoaiassistaiyouaiinai
usingaiNelsona i testaibanksaitoaiachieveaiyouraidesiredaioutcomesaiinaiyouraicourse.
TheaiTestaiBankaiforaiPrinciplesaiofaiMacroeconomics,aiSixthaiCanadianaiEditionaihasaibeenairevi
sedaifora i CanadianaistudentsaibyaiConstantinaiColonescu,aiMacEwanaiUniversity.aiTheaimultipl
e-
choicea i questionsaiwereaiwrittenaiandaieditedaitoaiconformaitoaiNETAaiguidelines,aiwhichaiem
phasizeaithea i developmentaiofaihigher-
orderaithinkingaiandaitheaieffectiveaiconstructionaiofaiquestions.aiNETAa i principlesaiofaiquestio
naiconstructionaihelpaieliminateaiambiguity,aiarguableaianswers,aiguesswork,a i andaiunconscio
usaicuesaitoaitest-
savvyaistudents,airesultingaiinaiaaitestaithataiaccuratelyaireflectsaistudenta i understanding.aiThea
iTestaiBankaioffersaioverai3510aiquestions,aiincludingaiaboutai2822aimultiplea i choice,aiaboutai3
62aitrue/false,aiaboutai162aiproblems,aiandaiaboutai164aishortaiansweraiquestions.
Inaiadditionaitoaiprovidingaiaaivarietyaiofaiquestionsairelatedaitoaieachaichapteraiobjective,aithisaite
4
ai
Test Bank ai
toaiaccompany
TestaiBankaipreparedai
bya i ConstantinaiColone
scua i MacEwanaiUniver
sity
,NETAaiAssessment:aiTestaiBankaitoaiaccompanyaiPrinciplesaiofaiMacroeconomics,
SixthaiCanadianaiEdition
ByaiN.aiGregoryaiMankiwai/aiRonaldaiD.aiKneeboneai/aiKennethaiJ.aiMcKenzie
TestaiBankaipreparedaibyaiConstantinaiColonescu,aiMacEwanaiUniversity
NETAaicopyaieditor:aiFrancesaiRobinson
AvailableaionaiInstructor’saiResourceaiCDaiISBNai.ai0-17-655440-8
COPYRIGHTai©2014aibyaiNelsonaiEducationaiLtd.aiNelsonaiisaiaairegisteredaitrademarkaiusedaihereinaiunderailicen
ce.aiAlla i rightsaireserved.
ForaimoreaiinformationaicontactaiNelson,ai1120aiBirchmountaiRoad,aiToronto,aiOntarioa i M1Kai5G4.aiOraiyouaican
aivisitaioura i Internetaisiteaiataiwww.nelson.com.
ALLaiRIGHTSaiRESERVED.aiNoaipartaiofaithisaiworkaicoveredaibyaitheaicopyrightaihereonaimayaibeaireproducedaiorai
usedaiina i anyaiformaioraibyaianyaimeans—
graphic,aielectronic,aioraimechanical,aiincludingaiphotocopying,airecording,aitaping,aiweba i distributionaioraiinfor
mationaistorageaiandairetrievalaisystems—withoutaitheaiwrittenaipermissionaiofaitheaipublisher
ii
, TABLEaiOFaiCONTENTS
Partai1aiIntroduction
Chapterai1aiTenaiPrinciplesaiofaiEconomics 1-1
Chapterai2aiThinkingaiLikeaianaiEconomist 2-1
Chapterai3aiInterdependenceaiandaitheaiGainsaifromaiTrade 3-1
Partai2aiSupplyaiAndaiDemand:aiHowaiMarketsaiWork
Chapterai4aiTheaiMarketaiForcesaiofaiSupplyaiandaiDemand 4-1
Partai3aiTheaiDataaiofaiMacroeconomics
Chapterai5aiMeasuringaiaaiNation’saiIncome 5-1
Chapterai6aiMeasuringaitheaiCostaiofaiLiving 6-1
Partai4aiTheaiRealaiEconomyaiinaitheaiLongaiRun
Chapterai7aiProductionaiandaiGrowth 7-1
Chapterai8aiSaving,aiInvestment,aiandaitheaiFinancialaiSystem 8-1
Chapterai9aiUnemploymentaiandaiItsaiNaturalaiRate 9-1
Partai5aiMoneyaiAndaiPricesaiinaitheaiLongaiRun
Chapterai10aiTheaiMonetaryaiSystem 10-1
Chapterai11aiMoneyaiGrowthaiandaiInflation 11-1
Partai6aiTheaiMacroeconomicsaiofaiOpenaiEconomies
Chapterai12aiOpen-EconomyaiMacroeconomics:aiBasicaiConcepts 12-1
Chapterai13aiAaiMacroeconomicaiTheoryaiofaitheaiSmallaiOpenaiEconomy 13-1
Partai7aiShort-RunaiEconomicaiFluctuations
Chapterai14aiAggregateaiDemandaiandaiAggregateaiSupply 14-1
Chapterai15aiTheaiInfluenceaiofaiMonetaryaiandaiFiscalaiPolicyaionaiAggregateaiDemand 15-1
Chapterai16aiTheaiShort-RunaiTradeoffaibetweenaiInflationaiandaiUnemployment 16-1
Partai8aiFinalaiThoughts
Chapterai17aiFiveaiDebatesaioveraiMacroeconomicaiPolicy 17-1
iii
, PREFACE
Inaimostaipost-
secondaryaicourses,aiaailargeaipercentageaiofaistudentaiassessmentaiisaibasedaionaimultiple-
a i choiceaitesting.aiManyaiinstructorsaiuseaimultiple-
choiceaireluctantly,aibelievingaithataiitaiisaiaa i methodologyaibestaiusedaiforaitestingaiwhataiaaistu
dentairemembersairatheraithanaiwhataisheaioraiheaihasa i learned.
NelsonaiEducationaiLtd.aiunderstandsaithataiaaigoodaiqualityaimultiple-
choiceaitestaibankaicanaiprovidea i theaimeansaitoaimeasureaihigher-
levelaithinkingaiskillsaiasaiwellaiasairecall.aiRecognizingaithea i importanceaiofaimultiple-
choiceaitestingaiinaitoday’saiclassroom,aiweaihaveaicreatedaiNETA—
thea i NelsonaiEducationaiTeachingaiAdvantageaiprogram—
toaiensureaitheaivalueaiofaiouraihighaiqualityaitesta i banks.
TheaiNETAaiprogramaiwasaicreatedaiinaipartnershipaiwithaiDavidaiDiBattista,aiaai3MaiNationalaiTea
chinga i Fellow,aiprofessoraiofaipsychologyaiataiBrockaiUniversity,aiandairesearcheraiinaitheaiareaai
ofaimultiple-a i choiceaitesting.aiNETAaiensuresaithataisubject-
matteraiexpertsaiwhoaiauthoraitestaibanksaihaveaihada i trainingaiinaitwoaiareas:aiavoidingaicomm
onaierrorsaiinaitestaiconstruction,aiandaidevelopingaimultiple-
a i choiceaitestaiquestionsaithatai“getaibeyondairemembering”aitoaiassessaihigher-levelaithinking.
AllaiNETAaitestaibanksaiincludeaiDavidaiDiBattista’saiguideaiforaiinstructors,ai“MultipleaiChoiceaiT
ests:a i GettingaiBeyondaiRemembering.”aiThisaiguideaihasaibeenaidesignedaitoaiassistaiyouaiinai
usingaiNelsona i testaibanksaitoaiachieveaiyouraidesiredaioutcomesaiinaiyouraicourse.
TheaiTestaiBankaiforaiPrinciplesaiofaiMacroeconomics,aiSixthaiCanadianaiEditionaihasaibeenairevi
sedaifora i CanadianaistudentsaibyaiConstantinaiColonescu,aiMacEwanaiUniversity.aiTheaimultipl
e-
choicea i questionsaiwereaiwrittenaiandaieditedaitoaiconformaitoaiNETAaiguidelines,aiwhichaiem
phasizeaithea i developmentaiofaihigher-
orderaithinkingaiandaitheaieffectiveaiconstructionaiofaiquestions.aiNETAa i principlesaiofaiquestio
naiconstructionaihelpaieliminateaiambiguity,aiarguableaianswers,aiguesswork,a i andaiunconscio
usaicuesaitoaitest-
savvyaistudents,airesultingaiinaiaaitestaithataiaccuratelyaireflectsaistudenta i understanding.aiThea
iTestaiBankaioffersaioverai3510aiquestions,aiincludingaiaboutai2822aimultiplea i choice,aiaboutai3
62aitrue/false,aiaboutai162aiproblems,aiandaiaboutai164aishortaiansweraiquestions.
Inaiadditionaitoaiprovidingaiaaivarietyaiofaiquestionsairelatedaitoaieachaichapteraiobjective,aithisaite
4
