NETA ASSESSMENT
h
Test Bank h
to accompany
h
TesthBankhpreparedhbyh
ConstantinhColonescuh
MacEwanhUniversity
,NETA Assessment: Test Bank to accompany Principles of Macroeconomics,
h h h h h h h h
Sixth Canadian Edition
h h
ByhN.hGregoryhMankiwh/hRonaldhD.hKneeboneh/hKennethhJ.hMcKenzie
TesthBankhpreparedhbyhConstantinhColonescu,hMacEwanhUniversity
NETAhcopyheditor:hFranceshRobinson
AvailablehonhInstructor’shResourcehCDhISBNh.h0-17-655440-8
COPYRIGHTh©2014hbyhNelsonhEducationhLtd.hNelsonhishahregisteredhtrademarkhusedhhereinhunderhlicence.hAllhri
ghtshreserved.
ForhmorehinformationhcontacthNelson,h1120hBirchmounthRoad,hToronto,hOntarioh M1Kh 5G4.hOrhyouhcanhvisithourhI
nternethsitehathwww.nelson.com.
ALLhRIGHTShRESERVED.hNohparthofhthishworkhcoveredhbyhthehcopyrighthhereonhmayhbehreproducedhorhusedhinha
nyhformhorhbyhanyhmeans—
graphic,helectronic,horhmechanical,hincludinghphotocopying,hrecording,htaping,hwebhdistributionhorhinformationhsto
ragehandhretrievalhsystems—withouththeh writtenhpermissionhofhthehpublisher
ii
, TABLE OF CONTENTS
h h
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,h Investment,handhthehFinancialhSystem 8-1
Chapterh9hUnemploymenthandhItshNaturalhRate 9-1
Parth5hMoneyhAndhPriceshinhtheh LonghRun
Chapterh10hThehMonetaryhSystem 10-1
Chapterh11hMoneyhGrowthhandhInflation 11-1
Parth6hThehMacroeconomicshofhOpenhEconomies
Chapterh12hOpen-EconomyhMacroeconomics:hBasichConcepts 12-1
Chapterh13hAhMacroeconomichTheoryhofhthehSmallhOpenhEconomy 13-1
Parth7hShort-RunhEconomichFluctuations
Chapterh14hAggregatehDemandhandhAggregatehSupply 14-1
Chapterh15hThehInfluencehofhMonetaryhandhFiscalh PolicyhonhAggregatehDemand 15-1
Chapterh16hThehShort-RunhTradeoffhbetweenhInflationhandhUnemployment 16-1
Parth8hFinalhThoughts
Chapterh17hFivehDebateshoverhMacroeconomichPolicy 17-1
iii
, PREFACE
Inhmosthpost-secondaryhcourses,hahlargehpercentagehofhstudenthassessmenthishbasedhonhmultiple-
hchoicehtesting.hManyhinstructorshusehmultiple-
choicehreluctantly,hbelievinghthathithishahmethodologyhbesthusedhforhtestinghwhathahstudenthremem
bershratherhthanhwhathshehorhhehhashlearned.
NelsonhEducationhLtd.hunderstandshthathahgoodhqualityhmultiple-
choicehtesthbankhcanhprovidehthehmeanshtohmeasurehhigher-
levelhthinkinghskillshashwellhashrecall.hRecognizinghthehimportancehofhmultiple-
choicehtestinghinhtoday’shclassroom,hwehhavehcreatedhNETA—
thehNelsonhEducationhTeachinghAdvantagehprogram—
tohensurehthehvaluehofhourhhighhqualityhtesthbanks.
ThehNETAhprogramhwashcreatedhinhpartnershiphwithhDavidhDiBattista,hah3MhNationalhTeachinghF
ellow,hprofessorhofhpsychologyhathBrockhUniversity,handhresearcherhinhthehareahofhmultiple-
hchoicehtesting.hNETAhensureshthathsubject-
matterhexpertshwhohauthorhtesthbankshhavehhadhtraininghinhtwohareas:havoidinghcommonherrorshinh
testhconstruction,handhdevelopinghmultiple-
hchoicehtesthquestionshthath“gethbeyondhremembering”htohassesshhigher-levelhthinking.
AllhNETAhtesthbankshincludehDavidhDiBattista’shguidehforhinstructors,h“MultiplehChoicehTests:h
GettinghBeyondhRemembering.”hThishguidehhashbeenhdesignedhtohassisthyouhinhusinghNelsonhtest
hbankshtohachieveh yourhdesiredhoutcomeshinh yourhcourse.
ThehTesthBankhforhPrincipleshofhMacroeconomics,hSixthhCanadianhEditionhhashbeenhrevisedhforh
CanadianhstudentshbyhConstantinhColonescu,hMacEwanhUniversity.hThehmultiple-
choicehquestionshwerehwrittenhandheditedhtohconformhtohNETAhguidelines,hwhichhemphasizehtheh
developmenthofhhigher-
orderhthinkinghandhtheheffectivehconstructionhofhquestions.hNETAhprincipleshofhquestionhconstru
ctionhhelpheliminatehambiguity,harguablehanswers,hguesswork,handhunconscioushcueshtohtest-
savvyhstudents,hresultinghinhahtesththathaccuratelyhreflectshstudenthunderstanding.hThehTesthBankh
offershoverh3510hquestions,hincludinghabouth2822hmultiplehchoice,habouth362htrue/false,habouth16
2hproblems,handhabouth164hshorthanswerhquestions.
Inhadditionhtohprovidinghahvarietyhofhquestionshrelatedhtoheachhchapterhobjective,hthishtesthbankha
lsohemployshahserieshofhtagshthathcanhhelphdesignheffective,hbalancedhtestshbyhthehmeasurehofhco
ursehoutcomes.hAllhofhthehtagsharehincludedhwithhthehquestionhinhthehtesthbank.hThesehtagshinclu
de:
ANS:hThehcorrecthanswer.h(Suggestedhanswersharehprovidedhforhthehshorthanswerhquestions.)
PTS:hThehnumberhofhpointshanhinstructorhcanhassignhforheachhquestion.hThehdefaulthish1hp
oint.
iv
h
Test Bank h
to accompany
h
TesthBankhpreparedhbyh
ConstantinhColonescuh
MacEwanhUniversity
,NETA Assessment: Test Bank to accompany Principles of Macroeconomics,
h h h h h h h h
Sixth Canadian Edition
h h
ByhN.hGregoryhMankiwh/hRonaldhD.hKneeboneh/hKennethhJ.hMcKenzie
TesthBankhpreparedhbyhConstantinhColonescu,hMacEwanhUniversity
NETAhcopyheditor:hFranceshRobinson
AvailablehonhInstructor’shResourcehCDhISBNh.h0-17-655440-8
COPYRIGHTh©2014hbyhNelsonhEducationhLtd.hNelsonhishahregisteredhtrademarkhusedhhereinhunderhlicence.hAllhri
ghtshreserved.
ForhmorehinformationhcontacthNelson,h1120hBirchmounthRoad,hToronto,hOntarioh M1Kh 5G4.hOrhyouhcanhvisithourhI
nternethsitehathwww.nelson.com.
ALLhRIGHTShRESERVED.hNohparthofhthishworkhcoveredhbyhthehcopyrighthhereonhmayhbehreproducedhorhusedhinha
nyhformhorhbyhanyhmeans—
graphic,helectronic,horhmechanical,hincludinghphotocopying,hrecording,htaping,hwebhdistributionhorhinformationhsto
ragehandhretrievalhsystems—withouththeh writtenhpermissionhofhthehpublisher
ii
, TABLE OF CONTENTS
h h
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,h Investment,handhthehFinancialhSystem 8-1
Chapterh9hUnemploymenthandhItshNaturalhRate 9-1
Parth5hMoneyhAndhPriceshinhtheh LonghRun
Chapterh10hThehMonetaryhSystem 10-1
Chapterh11hMoneyhGrowthhandhInflation 11-1
Parth6hThehMacroeconomicshofhOpenhEconomies
Chapterh12hOpen-EconomyhMacroeconomics:hBasichConcepts 12-1
Chapterh13hAhMacroeconomichTheoryhofhthehSmallhOpenhEconomy 13-1
Parth7hShort-RunhEconomichFluctuations
Chapterh14hAggregatehDemandhandhAggregatehSupply 14-1
Chapterh15hThehInfluencehofhMonetaryhandhFiscalh PolicyhonhAggregatehDemand 15-1
Chapterh16hThehShort-RunhTradeoffhbetweenhInflationhandhUnemployment 16-1
Parth8hFinalhThoughts
Chapterh17hFivehDebateshoverhMacroeconomichPolicy 17-1
iii
, PREFACE
Inhmosthpost-secondaryhcourses,hahlargehpercentagehofhstudenthassessmenthishbasedhonhmultiple-
hchoicehtesting.hManyhinstructorshusehmultiple-
choicehreluctantly,hbelievinghthathithishahmethodologyhbesthusedhforhtestinghwhathahstudenthremem
bershratherhthanhwhathshehorhhehhashlearned.
NelsonhEducationhLtd.hunderstandshthathahgoodhqualityhmultiple-
choicehtesthbankhcanhprovidehthehmeanshtohmeasurehhigher-
levelhthinkinghskillshashwellhashrecall.hRecognizinghthehimportancehofhmultiple-
choicehtestinghinhtoday’shclassroom,hwehhavehcreatedhNETA—
thehNelsonhEducationhTeachinghAdvantagehprogram—
tohensurehthehvaluehofhourhhighhqualityhtesthbanks.
ThehNETAhprogramhwashcreatedhinhpartnershiphwithhDavidhDiBattista,hah3MhNationalhTeachinghF
ellow,hprofessorhofhpsychologyhathBrockhUniversity,handhresearcherhinhthehareahofhmultiple-
hchoicehtesting.hNETAhensureshthathsubject-
matterhexpertshwhohauthorhtesthbankshhavehhadhtraininghinhtwohareas:havoidinghcommonherrorshinh
testhconstruction,handhdevelopinghmultiple-
hchoicehtesthquestionshthath“gethbeyondhremembering”htohassesshhigher-levelhthinking.
AllhNETAhtesthbankshincludehDavidhDiBattista’shguidehforhinstructors,h“MultiplehChoicehTests:h
GettinghBeyondhRemembering.”hThishguidehhashbeenhdesignedhtohassisthyouhinhusinghNelsonhtest
hbankshtohachieveh yourhdesiredhoutcomeshinh yourhcourse.
ThehTesthBankhforhPrincipleshofhMacroeconomics,hSixthhCanadianhEditionhhashbeenhrevisedhforh
CanadianhstudentshbyhConstantinhColonescu,hMacEwanhUniversity.hThehmultiple-
choicehquestionshwerehwrittenhandheditedhtohconformhtohNETAhguidelines,hwhichhemphasizehtheh
developmenthofhhigher-
orderhthinkinghandhtheheffectivehconstructionhofhquestions.hNETAhprincipleshofhquestionhconstru
ctionhhelpheliminatehambiguity,harguablehanswers,hguesswork,handhunconscioushcueshtohtest-
savvyhstudents,hresultinghinhahtesththathaccuratelyhreflectshstudenthunderstanding.hThehTesthBankh
offershoverh3510hquestions,hincludinghabouth2822hmultiplehchoice,habouth362htrue/false,habouth16
2hproblems,handhabouth164hshorthanswerhquestions.
Inhadditionhtohprovidinghahvarietyhofhquestionshrelatedhtoheachhchapterhobjective,hthishtesthbankha
lsohemployshahserieshofhtagshthathcanhhelphdesignheffective,hbalancedhtestshbyhthehmeasurehofhco
ursehoutcomes.hAllhofhthehtagsharehincludedhwithhthehquestionhinhthehtesthbank.hThesehtagshinclu
de:
ANS:hThehcorrecthanswer.h(Suggestedhanswersharehprovidedhforhthehshorthanswerhquestions.)
PTS:hThehnumberhofhpointshanhinstructorhcanhassignhforheachhquestion.hThehdefaulthish1hp
oint.
iv
