NETA ASSESSMENT
S
Test Bank S
toSaccompany
TestSBankSpreparedSbySConst
antinSColonescuSMacEwanSU
niversity
,NETASAssessment:STestSBankStoSaccompanySPrinciplesSofSMacroeconomics,
SixthSCanadianSEdition
BySN.SGregorySMankiwS/SRonaldSD.SKneeboneS/SKennethSJ.SMcKenzie
TestSBankSpreparedSbySConstantinSColonescu,SMacEwanSUniversity
NETAScopySeditor:SFrancesSRobinson
AvailableSonSInstructor’sSResourceSCDSISBNS.S0-17-655440-8
COPYRIGHTS©2014SbySNelsonSEducationSLtd.SNelsonSisSaSregisteredStrademarkSusedShereinSunderSlicence
.SAllSrightsSreserved.
ForSmoreSinformationScontactSNelson,S1120SBirchmountSRoad,SToronto,SOntarioS M1KS5G4.SOrSyouScanSvi
sitSourSInternetSsiteSatSwww.nelson.com.
ALLSRIGHTSSRESERVED.SNoSpartSofSthisSworkScoveredSbyStheScopyrightShereonSmaySbeSreproducedSorS
usedSinSanySformSorSbySanySmeans—
graphic,Selectronic,SorSmechanical,SincludingSphotocopying,Srecording,Staping,SwebSdistributionSorSinformati
onSstorageSandSretrievalSsystems—withoutStheSwrittenSpermissionSofStheSpublisher
ii
, TABLESOFSCONTENTS
PartS1SIntroduction
ChapterS1STenSPrinciplesSofSEconomics 1-1
ChapterS2SThinkingSLikeSanSEconomist 2-1
ChapterS3SInterdependenceSandStheSGainsSfromSTrade 3-1
PartS2SSupplySAndSDemand:SHowSMarketsSWork
ChapterS4STheSMarketSForcesSofSSupplySandSDemand 4-1
PartS3STheSDataSofSMacroeconomics
ChapterS5SMeasuringSaSNation’sSIncome 5-1
ChapterS6SMeasuringStheSCostSofSLiving 6-1
PartS4STheSRealSEconomySinStheSLongSRun
ChapterS7SProductionSandSGrowth 7-1
ChapterS8SSaving,SInvestment,SandStheSFinancialSSystem 8-1
ChapterS9SUnemploymentSandSItsSNaturalSRate 9-1
PartS5SMoneySAndSPricesSinStheSLongSRun
ChapterS10STheSMonetarySSystem 10-1
ChapterS11SMoneySGrowthSandSInflation 11-1
PartS6STheSMacroeconomicsSofSOpenSEconomies
ChapterS12SOpen-EconomySMacroeconomics:SBasicSConcepts 12-1
ChapterS13SASMacroeconomicSTheorySofStheSSmallSOpenSEconomy 13-1
PartS7SShort-RunSEconomicSFluctuations
ChapterS14SAggregateSDemandSandSAggregateSSupply 14-1
ChapterS15STheSInfluenceSofSMonetarySandSFiscalSPolicySonSAggregateSDemand 15-1
ChapterS16STheSShort-RunSTradeoffSbetweenSInflationSandSUnemployment 16-1
PartS8SFinalSThoughts
ChapterS17SFiveSDebatesSoverSMacroeconomicSPolicy 17-1
iii
, PREFACE
InSmostSpost-
secondaryScourses,SaSlargeSpercentageSofSstudentSassessmentSisSbasedSonSmultiple-
SchoiceStesting.SManySinstructorsSuseSmultiple-
choiceSreluctantly,SbelievingSthatSitSisSaSmethodologySbestSusedSforStestingSwhatSaSstudentSr
emembersSratherSthanSwhatSsheSorSheShasSlearned.
NelsonSEducationSLtd.SunderstandsSthatSaSgoodSqualitySmultiple-
choiceStestSbankScanSprovideStheSmeansStoSmeasureShigher-
levelSthinkingSskillsSasSwellSasSrecall.SRecognizingStheSimportanceSofSmultiple-
choiceStestingSinStoday’sSclassroom,SweShaveScreatedSNETA—
theSNelsonSEducationSTeachingSAdvantageSprogram—
toSensureStheSvalueSofSourShighSqualityStestSbanks.
TheSNETASprogramSwasScreatedSinSpartnershipSwithSDavidSDiBattista,SaS3MSNationalSTeachi
ngSFellow,SprofessorSofSpsychologySatSBrockSUniversity,SandSresearcherSinStheSareaSofSmulti
ple-SchoiceStesting.SNETASensuresSthatSsubject-
matterSexpertsSwhoSauthorStestSbanksShaveShadStrainingSinStwoSareas:SavoidingScommonSerror
sSinStestSconstruction,SandSdevelopingSmultiple-
SchoiceStestSquestionsSthatS“getSbeyondSremembering”StoSassessShigher-levelSthinking.
AllSNETAStestSbanksSincludeSDavidSDiBattista’sSguideSforSinstructors,S“MultipleSChoiceSTe
sts:SGettingSBeyondSRemembering.”SThisSguideShasSbeenSdesignedStoSassistSyouSinSusingSN
elsonStestSbanksStoSachieveSyourSdesiredSoutcomesSinSyourScourse.
TheSTestSBankSforSPrinciplesSofSMacroeconomics,SSixthSCanadianSEditionShasSbeenSrevised
SforSCanadianSstudentsSbySConstantinSColonescu,SMacEwanSUniversity.STheSmultiple-
choiceSquestionsSwereSwrittenSandSeditedStoSconformStoSNETASguidelines,SwhichSemphasiz
eStheSdevelopmentSofShigher-
orderSthinkingSandStheSeffectiveSconstructionSofSquestions.SNETASprinciplesSofSquestionSco
nstructionShelpSeliminateSambiguity,SarguableSanswers,Sguesswork,SandSunconsciousScuesSto
Stest-
savvySstudents,SresultingSinSaStestSthatSaccuratelySreflectsSstudentSunderstanding.STheSTestS
BankSoffersSoverS3510Squestions,SincludingSaboutS2822SmultipleSchoice,SaboutS362Strue/fals
e,SaboutS162Sproblems,SandSaboutS164SshortSanswerSquestions.
InSadditionStoSprovidingSaSvarietySofSquestionsSrelatedStoSeachSchapterSobjective,SthisStestSb
ankSalsoSemploysSaSseriesSofStagsSthatScanShelpSdesignSeffective,SbalancedStestsSbyStheSmea
sureSofScourseSoutcomes.SAllSofStheStagsSareSincludedSwithStheSquestionSinStheStestSbank.ST
heseStagsSinclude:
iv
S
Test Bank S
toSaccompany
TestSBankSpreparedSbySConst
antinSColonescuSMacEwanSU
niversity
,NETASAssessment:STestSBankStoSaccompanySPrinciplesSofSMacroeconomics,
SixthSCanadianSEdition
BySN.SGregorySMankiwS/SRonaldSD.SKneeboneS/SKennethSJ.SMcKenzie
TestSBankSpreparedSbySConstantinSColonescu,SMacEwanSUniversity
NETAScopySeditor:SFrancesSRobinson
AvailableSonSInstructor’sSResourceSCDSISBNS.S0-17-655440-8
COPYRIGHTS©2014SbySNelsonSEducationSLtd.SNelsonSisSaSregisteredStrademarkSusedShereinSunderSlicence
.SAllSrightsSreserved.
ForSmoreSinformationScontactSNelson,S1120SBirchmountSRoad,SToronto,SOntarioS M1KS5G4.SOrSyouScanSvi
sitSourSInternetSsiteSatSwww.nelson.com.
ALLSRIGHTSSRESERVED.SNoSpartSofSthisSworkScoveredSbyStheScopyrightShereonSmaySbeSreproducedSorS
usedSinSanySformSorSbySanySmeans—
graphic,Selectronic,SorSmechanical,SincludingSphotocopying,Srecording,Staping,SwebSdistributionSorSinformati
onSstorageSandSretrievalSsystems—withoutStheSwrittenSpermissionSofStheSpublisher
ii
, TABLESOFSCONTENTS
PartS1SIntroduction
ChapterS1STenSPrinciplesSofSEconomics 1-1
ChapterS2SThinkingSLikeSanSEconomist 2-1
ChapterS3SInterdependenceSandStheSGainsSfromSTrade 3-1
PartS2SSupplySAndSDemand:SHowSMarketsSWork
ChapterS4STheSMarketSForcesSofSSupplySandSDemand 4-1
PartS3STheSDataSofSMacroeconomics
ChapterS5SMeasuringSaSNation’sSIncome 5-1
ChapterS6SMeasuringStheSCostSofSLiving 6-1
PartS4STheSRealSEconomySinStheSLongSRun
ChapterS7SProductionSandSGrowth 7-1
ChapterS8SSaving,SInvestment,SandStheSFinancialSSystem 8-1
ChapterS9SUnemploymentSandSItsSNaturalSRate 9-1
PartS5SMoneySAndSPricesSinStheSLongSRun
ChapterS10STheSMonetarySSystem 10-1
ChapterS11SMoneySGrowthSandSInflation 11-1
PartS6STheSMacroeconomicsSofSOpenSEconomies
ChapterS12SOpen-EconomySMacroeconomics:SBasicSConcepts 12-1
ChapterS13SASMacroeconomicSTheorySofStheSSmallSOpenSEconomy 13-1
PartS7SShort-RunSEconomicSFluctuations
ChapterS14SAggregateSDemandSandSAggregateSSupply 14-1
ChapterS15STheSInfluenceSofSMonetarySandSFiscalSPolicySonSAggregateSDemand 15-1
ChapterS16STheSShort-RunSTradeoffSbetweenSInflationSandSUnemployment 16-1
PartS8SFinalSThoughts
ChapterS17SFiveSDebatesSoverSMacroeconomicSPolicy 17-1
iii
, PREFACE
InSmostSpost-
secondaryScourses,SaSlargeSpercentageSofSstudentSassessmentSisSbasedSonSmultiple-
SchoiceStesting.SManySinstructorsSuseSmultiple-
choiceSreluctantly,SbelievingSthatSitSisSaSmethodologySbestSusedSforStestingSwhatSaSstudentSr
emembersSratherSthanSwhatSsheSorSheShasSlearned.
NelsonSEducationSLtd.SunderstandsSthatSaSgoodSqualitySmultiple-
choiceStestSbankScanSprovideStheSmeansStoSmeasureShigher-
levelSthinkingSskillsSasSwellSasSrecall.SRecognizingStheSimportanceSofSmultiple-
choiceStestingSinStoday’sSclassroom,SweShaveScreatedSNETA—
theSNelsonSEducationSTeachingSAdvantageSprogram—
toSensureStheSvalueSofSourShighSqualityStestSbanks.
TheSNETASprogramSwasScreatedSinSpartnershipSwithSDavidSDiBattista,SaS3MSNationalSTeachi
ngSFellow,SprofessorSofSpsychologySatSBrockSUniversity,SandSresearcherSinStheSareaSofSmulti
ple-SchoiceStesting.SNETASensuresSthatSsubject-
matterSexpertsSwhoSauthorStestSbanksShaveShadStrainingSinStwoSareas:SavoidingScommonSerror
sSinStestSconstruction,SandSdevelopingSmultiple-
SchoiceStestSquestionsSthatS“getSbeyondSremembering”StoSassessShigher-levelSthinking.
AllSNETAStestSbanksSincludeSDavidSDiBattista’sSguideSforSinstructors,S“MultipleSChoiceSTe
sts:SGettingSBeyondSRemembering.”SThisSguideShasSbeenSdesignedStoSassistSyouSinSusingSN
elsonStestSbanksStoSachieveSyourSdesiredSoutcomesSinSyourScourse.
TheSTestSBankSforSPrinciplesSofSMacroeconomics,SSixthSCanadianSEditionShasSbeenSrevised
SforSCanadianSstudentsSbySConstantinSColonescu,SMacEwanSUniversity.STheSmultiple-
choiceSquestionsSwereSwrittenSandSeditedStoSconformStoSNETASguidelines,SwhichSemphasiz
eStheSdevelopmentSofShigher-
orderSthinkingSandStheSeffectiveSconstructionSofSquestions.SNETASprinciplesSofSquestionSco
nstructionShelpSeliminateSambiguity,SarguableSanswers,Sguesswork,SandSunconsciousScuesSto
Stest-
savvySstudents,SresultingSinSaStestSthatSaccuratelySreflectsSstudentSunderstanding.STheSTestS
BankSoffersSoverS3510Squestions,SincludingSaboutS2822SmultipleSchoice,SaboutS362Strue/fals
e,SaboutS162Sproblems,SandSaboutS164SshortSanswerSquestions.
InSadditionStoSprovidingSaSvarietySofSquestionsSrelatedStoSeachSchapterSobjective,SthisStestSb
ankSalsoSemploysSaSseriesSofStagsSthatScanShelpSdesignSeffective,SbalancedStestsSbyStheSmea
sureSofScourseSoutcomes.SAllSofStheStagsSareSincludedSwithStheSquestionSinStheStestSbank.ST
heseStagsSinclude:
iv
