NETA ASSESSMENT Test Bank to accompany

NETA ASSESSMENT
Test Bank
to accompany

,NETA bfAssessment: bfTest bfBank bfto bfaccompany bfPrinciples bfof bfMacroeconomics,
Sixth bfCanadian bfEdition

By bfN. bfGregory bfMankiw bf/ bfRonald bfD. bfKneebone bf/ bfKenneth bfJ. bfMcKenzie



Test bfBank bfprepared bfby bfConstantin bfColonescu, bfMacEwan bfUniversity



NETA bfcopy bfeditor: bfFrances bfRobinson


Available bfon bfInstructor’s bfResource bfCD bfISBN bf. bf0-17-655440-8

COPYRIGHT bf©2014 bfby bfNelson bfEducation bfLtd. bfNelson bfis bfa bfregistered bftrademark bfused bfherein bfunder
bflicence. bfAll b f rights bfreserved.



For bfmore bfinformation bfcontact bfNelson, bf1120 bfBirchmount bfRoad, bfToronto, bfOntario bf M1K bf5G4. bfOr bfyou
bfcan bfvisit bfour b f Internet bfsite bfat bfwww.nelson.com.



ALL bfRIGHTS bfRESERVED. bfNo bfpart bfof bfthis bfwork bfcovered bfby bfthe bfcopyright bfhereon bfmay bfbe bfreproduced
bfor bfused bfin b f any bfform bfor bfby bfany bfmeans—graphic, bfelectronic, bfor bfmechanical, bfincluding bfphotocopying,

bfrecording, bftaping, bfweb b f distribution bfor bfinformation bfstorage bfand bfretrieval bfsystems—without bfthe

bfwritten bfpermission bfof bfthe bfpublisher




ii

, TABLE bfOF bfCONTENTS

Part bf1 bfIntroduction
Chapter bf1 bfTen bfPrinciples bfof bfEconomics 1-1
Chapter bf2 bfThinking bfLike bfan bfEconomist 2-1
Chapter bf3 bfInterdependence bfand bfthe bfGains bffrom bfTrade 3-1

Part bf2 bfSupply bfAnd bfDemand: bfHow bfMarkets bfWork
Chapter bf4 bfThe bfMarket bfForces bfof bfSupply bfand bfDemand 4-1

Part bf3 bfThe bfData bfof bfMacroeconomics
Chapter bf5 bfMeasuring bfa bfNation’s bfIncome 5-1
Chapter bf6 bfMeasuring bfthe bfCost bfof bfLiving 6-1

Part bf4 bfThe bfReal bfEconomy bfin bfthe bfLong bfRun
Chapter bf7 bfProduction bfand bfGrowth 7-1
Chapter bf8 bfSaving, bfInvestment, bfand bfthe bfFinancial bfSystem 8-1
Chapter bf9 bfUnemployment bfand bfIts bfNatural bfRate 9-1

Part bf5 bfMoney bfAnd bfPrices bfin bfthe bfLong bfRun
Chapter bf10 bfThe bfMonetary bfSystem 10-1
Chapter bf11 bfMoney bfGrowth bfand bfInflation 11-1

Part bf6 bfThe bfMacroeconomics bfof bfOpen bfEconomies
Chapter bf12 bfOpen-Economy bfMacroeconomics: bfBasic bfConcepts 12-1
Chapter bf13 bfA bfMacroeconomic bfTheory bfof bfthe bfSmall bfOpen bfEconomy 13-1

Part bf7 bfShort-Run bfEconomic bfFluctuations
Chapter bf14 bfAggregate bfDemand bfand bfAggregate bfSupply 14-1
Chapter bf15 bfThe bfInfluence bfof bfMonetary bfand bfFiscal bfPolicy bfon bfAggregate bfDemand 15-1
Chapter bf16 bfThe bfShort-Run bfTradeoff bfbetween bfInflation bfand bfUnemployment 16-1

Part bf8 bfFinal bfThoughts
Chapter bf17 bfFive bfDebates bfover bfMacroeconomic bfPolicy 17-1




iii

, PREFACE




In bfmost bfpost-secondary bfcourses, bfa bflarge bfpercentage bfof bfstudent bfassessment bfis bfbased
bfon bfmultiple- b f choice bftesting. bfMany bfinstructors bfuse bfmultiple-choice bfreluctantly,

bfbelieving bfthat bfit bfis bfa b f methodology bfbest bfused bffor bftesting bfwhat bfa bfstudent bfremembers

bfrather bfthan bfwhat bfshe bfor bfhe bfhas b f learned.



Nelson bfEducation bfLtd. bfunderstands bfthat bfa bfgood bfquality bfmultiple-choice bftest bfbank bfcan
bfprovide b f the bfmeans bfto bfmeasure bfhigher-level bfthinking bfskills bfas bfwell bfas bfrecall.

bfRecognizing bfthe b f importance bfof bfmultiple-choice bftesting bfin bftoday’s bfclassroom, bfwe

bfhave bfcreated bfNETA—the b f Nelson bfEducation bfTeaching bfAdvantage bfprogram—to bfensure

bfthe bfvalue bfof bfour bfhigh bfquality bftest b f banks.



The bfNETA bfprogram bfwas bfcreated bfin bfpartnership bfwith bfDavid bfDiBattista, bfa bf3M bfNational
bfTeaching b f Fellow, bfprofessor bfof bfpsychology bfat bf Brock bfUniversity, bfand bfresearcher bfin bfthe

bfarea bfof bfmultiple- b f choice bftesting. bfNETA bfensures bfthat bfsubject-matter bfexperts bfwho

bfauthor bftest bfbanks bfhave bfhad b f training bfin bftwo bfareas: bfavoiding bfcommon bferrors bfin bftest

bfconstruction, bfand bfdeveloping bfmultiple- b f choice bftest bfquestions bfthat bf“get bfbeyond

bfremembering” bfto bfassess bfhigher-level bfthinking.



All bfNETA bftest bfbanks bfinclude bfDavid bfDiBattista’s bfguide bffor bfinstructors, bf“Multiple bfChoice
bfTests: b f Getting bfBeyond bfRemembering.” bfThis bfguide bfhas bfbeen bfdesigned bfto bfassist bfyou

bfin bfusing bfNelson b f test bfbanks bfto bfachieve bfyour bfdesired bfoutcomes bfin bf your bfcourse.



The bfTest bfBank bffor bfPrinciples bfof bfMacroeconomics, bfSixth bfCanadian bfEdition bfhas bfbeen
bfrevised bffor b f Canadian bfstudents bfby bfConstantin bfColonescu, bfMacEwan bfUniversity. bfThe

bfmultiple-choice b f questions bfwere bfwritten bfand bfedited bfto bfconform bfto bfNETA bfguidelines,

bfwhich bfemphasize bfthe b f development bfof bfhigher-order bfthinking bfand bfthe bfeffective

bfconstruction bfof bfquestions. bfNETA b f principles bfof bfquestion bfconstruction bfhelp bfeliminate

bfambiguity, bfarguable bfanswers, bfguesswork, b f and bfunconscious bfcues bfto bftest-savvy

bfstudents, bfresulting bfin bfa bftest bfthat bfaccurately bfreflects bfstudent b f understanding. bfThe

bfTest bfBank bfoffers bfover bf3510 bfquestions, bfincluding bfabout bf2822 bfmultiple b f choice, bfabout

bf362 bftrue/false, bfabout bf162 bfproblems, bfand bfabout bf164 bfshort bfanswer bfquestions.




In bfaddition bfto bfproviding bfa bfvariety bfof bfquestions bfrelated bfto bfeach bfchapter bfobjective, bfthis
bftest bfbank b f also bfemploys bfa bfseries bfof bftags bfthat bfcan bfhelp bfdesign bfeffective, bfbalanced

bftests bfby bfthe bfmeasure bfof b f course bfoutcomes. bfAll bfof bfthe bftags bfare bfincluded bfwith bfthe

bfquestion bfin bfthe bftest bfbank. bfThese bftags b f include:

 ANS: bfThe bfcorrect bfanswer. bf(Suggested bfanswers bfare bfprovided bffor bfthe bfshort bfanswer
4