NETAASSESSMENT
f
Test Bank f
to accompany
f
TestfBankfpreparedfbyf
ConstantinfColonescuf
MacEwanfUniversity
,NETA Assessment: Test Bank to accompany Principles of Macroeconomics,
f f f f f f f f
Sixth Canadian Edition
f f
ByfN.fGregoryfMankiwf/fRonaldfD.fKneebonef/fKennethfJ.fMcKenzie
TestfBankfpreparedfbyfConstantinfColonescu,fMacEwanfUniversity
NETAfcopyfeditor:fFrancesfRobinson
AvailablefonfInstructor’sfResourcefCDfISBNf.f0-17-655440-8
COPYRIGHTf©2014fbyfNelsonfEducationfLtd.fNelsonfisfafregisteredftrademarkfusedfhereinfunderflicence.fAllf rightsfr
eserved.
ForfmorefinformationfcontactfNelson,f1120fBirchmountfRoad,fToronto,fOntariof M1Kf5G4.fOrfyoufcanfvisitfourf Inter
netfsitefatfwww.nelson.com.
ALLfRIGHTSfRESERVED.fNofpartfoffthisfworkfcoveredfbyfthefcopyrightfhereonfmayfbefreproducedforfusedfinf anyffor
mforfbyfanyfmeans—
graphic,felectronic,forfmechanical,fincludingfphotocopying,frecording,ftaping,fwebf distributionforfinformationfstor
agefandfretrievalfsystems—withoutfthefwrittenfpermissionfoffthefpublisher
ii
, TABLE OF CONTENTS
f f
Partf1fIntroduction
Chapterf1fTenfPrinciplesfoffEconomics 1-1
Chapterf2fThinkingfLikefanfEconomist 2-1
Chapterf3fInterdependencefandfthefGainsffromfTrade 3-1
Partf2fSupplyfAndfDemand:fHowfMarketsfWork
Chapterf4fThefMarketfForcesfoffSupplyfandfDemand 4-1
Partf3fThefDatafoffMacroeconomics
Chapterf5fMeasuringfafNation’sfIncome 5-1
Chapterf6fMeasuringfthefCostfoffLiving 6-1
Partf4fThefRealfEconomyfinfthefLongfRun
Chapterf7fProductionfandfGrowth 7-1
Chapterf8fSaving,fInvestment,fandfthefFinancialfSystem 8-1
Chapterf9fUnemploymentfandfItsfNaturalfRate 9-1
Partf5fMoneyfAndfPricesfinfthefLongfRun
Chapterf10fThefMonetaryfSystem 10-1
Chapterf11fMoneyfGrowthfandfInflation 11-1
Partf6fThefMacroeconomicsfoffOpenfEconomies
Chapterf12fOpen-EconomyfMacroeconomics:fBasicfConcepts 12-1
Chapterf13fAfMacroeconomicfTheoryfoffthefSmallfOpenfEconomy 13-1
Partf7fShort-RunfEconomicfFluctuations
Chapterf14fAggregatefDemandfandfAggregatefSupply 14-1
Chapterf15fThefInfluencefoffMonetaryfandfFiscalfPolicyfonfAggregatefDemand 15-1
Chapterf16fThefShort-RunfTradeofffbetweenfInflationfandfUnemployment 16-1
Partf8fFinalfThoughts
Chapterf17fFivefDebatesfoverfMacroeconomicfPolicy 17-1
iii
, PREFACE
Infmostfpost-secondaryfcourses,faflargefpercentagefoffstudentfassessmentfisfbasedfonfmultiple-
f choiceftesting.fManyfinstructorsfusefmultiple-
choicefreluctantly,fbelievingfthatfitfisfaf methodologyfbestfusedfforftestingfwhatfafstudentfrememb
ersfratherfthanfwhatfsheforfhefhasf learned.
NelsonfEducationfLtd.funderstandsfthatfafgoodfqualityfmultiple-
choiceftestfbankfcanfprovidef thefmeansftofmeasurefhigher-
levelfthinkingfskillsfasfwellfasfrecall.fRecognizingfthef importancefoffmultiple-
choiceftestingfinftoday’sfclassroom,fwefhavefcreatedfNETA—
thef NelsonfEducationfTeachingfAdvantagefprogram—
tofensurefthefvaluefoffourfhighfqualityftestf banks.
ThefNETAfprogramfwasfcreatedfinfpartnershipfwithfDavidfDiBattista,faf3MfNationalfTeachingf Fell
ow,fprofessorfoffpsychologyfatfBrockfUniversity,fandfresearcherfinfthefareafoffmultiple-
f choiceftesting.fNETAfensuresfthatfsubject-
matterfexpertsfwhofauthorftestfbanksfhavefhadf trainingfinftwofareas:favoidingfcommonferrorsfinf
testfconstruction,fandfdevelopingfmultiple-
f choiceftestfquestionsfthatf“getfbeyondfremembering”ftofassessfhigher-levelfthinking.
AllfNETAftestfbanksfincludefDavidfDiBattista’sfguidefforfinstructors,f“MultiplefChoicefTests:f Gett
ingfBeyondfRemembering.”fThisfguidefhasfbeenfdesignedftofassistfyoufinfusingfNelsonf testfbank
sftofachievefyourfdesiredfoutcomesfinf yourfcourse.
ThefTestfBankfforfPrinciplesfoffMacroeconomics,fSixthfCanadianfEditionfhasfbeenfrevisedfforf Ca
nadianfstudentsfbyfConstantinfColonescu,fMacEwanfUniversity.fThefmultiple-
choicef questionsfwerefwrittenfandfeditedftofconformftofNETAfguidelines,fwhichfemphasizefthe
f developmentfoffhigher-
orderfthinkingfandfthefeffectivefconstructionfoffquestions.fNETAf principlesfoffquestionfconstruc
tionfhelpfeliminatefambiguity,farguablefanswers,fguesswork,f andfunconsciousfcuesftoftest-
savvyfstudents,fresultingfinfaftestfthatfaccuratelyfreflectsfstudentf understanding.fThefTestfBankf
offersfoverf3510fquestions,fincludingfaboutf2822fmultiplef choice,faboutf362ftrue/false,faboutf1
62fproblems,fandfaboutf164fshortfanswerfquestions.
Infadditionftofprovidingfafvarietyfoffquestionsfrelatedftofeachfchapterfobjective,fthisftestfbankf als
ofemploysfafseriesfofftagsfthatfcanfhelpfdesignfeffective,fbalancedftestsfbyfthefmeasurefoff coursef
outcomes.fAllfofftheftagsfarefincludedfwithfthefquestionfinftheftestfbank.fTheseftagsf include:
• ANS:fThefcorrectfanswer.f(Suggestedfanswersfarefprovidedfforfthefshortfanswerfquestions.)
4
f
Test Bank f
to accompany
f
TestfBankfpreparedfbyf
ConstantinfColonescuf
MacEwanfUniversity
,NETA Assessment: Test Bank to accompany Principles of Macroeconomics,
f f f f f f f f
Sixth Canadian Edition
f f
ByfN.fGregoryfMankiwf/fRonaldfD.fKneebonef/fKennethfJ.fMcKenzie
TestfBankfpreparedfbyfConstantinfColonescu,fMacEwanfUniversity
NETAfcopyfeditor:fFrancesfRobinson
AvailablefonfInstructor’sfResourcefCDfISBNf.f0-17-655440-8
COPYRIGHTf©2014fbyfNelsonfEducationfLtd.fNelsonfisfafregisteredftrademarkfusedfhereinfunderflicence.fAllf rightsfr
eserved.
ForfmorefinformationfcontactfNelson,f1120fBirchmountfRoad,fToronto,fOntariof M1Kf5G4.fOrfyoufcanfvisitfourf Inter
netfsitefatfwww.nelson.com.
ALLfRIGHTSfRESERVED.fNofpartfoffthisfworkfcoveredfbyfthefcopyrightfhereonfmayfbefreproducedforfusedfinf anyffor
mforfbyfanyfmeans—
graphic,felectronic,forfmechanical,fincludingfphotocopying,frecording,ftaping,fwebf distributionforfinformationfstor
agefandfretrievalfsystems—withoutfthefwrittenfpermissionfoffthefpublisher
ii
, TABLE OF CONTENTS
f f
Partf1fIntroduction
Chapterf1fTenfPrinciplesfoffEconomics 1-1
Chapterf2fThinkingfLikefanfEconomist 2-1
Chapterf3fInterdependencefandfthefGainsffromfTrade 3-1
Partf2fSupplyfAndfDemand:fHowfMarketsfWork
Chapterf4fThefMarketfForcesfoffSupplyfandfDemand 4-1
Partf3fThefDatafoffMacroeconomics
Chapterf5fMeasuringfafNation’sfIncome 5-1
Chapterf6fMeasuringfthefCostfoffLiving 6-1
Partf4fThefRealfEconomyfinfthefLongfRun
Chapterf7fProductionfandfGrowth 7-1
Chapterf8fSaving,fInvestment,fandfthefFinancialfSystem 8-1
Chapterf9fUnemploymentfandfItsfNaturalfRate 9-1
Partf5fMoneyfAndfPricesfinfthefLongfRun
Chapterf10fThefMonetaryfSystem 10-1
Chapterf11fMoneyfGrowthfandfInflation 11-1
Partf6fThefMacroeconomicsfoffOpenfEconomies
Chapterf12fOpen-EconomyfMacroeconomics:fBasicfConcepts 12-1
Chapterf13fAfMacroeconomicfTheoryfoffthefSmallfOpenfEconomy 13-1
Partf7fShort-RunfEconomicfFluctuations
Chapterf14fAggregatefDemandfandfAggregatefSupply 14-1
Chapterf15fThefInfluencefoffMonetaryfandfFiscalfPolicyfonfAggregatefDemand 15-1
Chapterf16fThefShort-RunfTradeofffbetweenfInflationfandfUnemployment 16-1
Partf8fFinalfThoughts
Chapterf17fFivefDebatesfoverfMacroeconomicfPolicy 17-1
iii
, PREFACE
Infmostfpost-secondaryfcourses,faflargefpercentagefoffstudentfassessmentfisfbasedfonfmultiple-
f choiceftesting.fManyfinstructorsfusefmultiple-
choicefreluctantly,fbelievingfthatfitfisfaf methodologyfbestfusedfforftestingfwhatfafstudentfrememb
ersfratherfthanfwhatfsheforfhefhasf learned.
NelsonfEducationfLtd.funderstandsfthatfafgoodfqualityfmultiple-
choiceftestfbankfcanfprovidef thefmeansftofmeasurefhigher-
levelfthinkingfskillsfasfwellfasfrecall.fRecognizingfthef importancefoffmultiple-
choiceftestingfinftoday’sfclassroom,fwefhavefcreatedfNETA—
thef NelsonfEducationfTeachingfAdvantagefprogram—
tofensurefthefvaluefoffourfhighfqualityftestf banks.
ThefNETAfprogramfwasfcreatedfinfpartnershipfwithfDavidfDiBattista,faf3MfNationalfTeachingf Fell
ow,fprofessorfoffpsychologyfatfBrockfUniversity,fandfresearcherfinfthefareafoffmultiple-
f choiceftesting.fNETAfensuresfthatfsubject-
matterfexpertsfwhofauthorftestfbanksfhavefhadf trainingfinftwofareas:favoidingfcommonferrorsfinf
testfconstruction,fandfdevelopingfmultiple-
f choiceftestfquestionsfthatf“getfbeyondfremembering”ftofassessfhigher-levelfthinking.
AllfNETAftestfbanksfincludefDavidfDiBattista’sfguidefforfinstructors,f“MultiplefChoicefTests:f Gett
ingfBeyondfRemembering.”fThisfguidefhasfbeenfdesignedftofassistfyoufinfusingfNelsonf testfbank
sftofachievefyourfdesiredfoutcomesfinf yourfcourse.
ThefTestfBankfforfPrinciplesfoffMacroeconomics,fSixthfCanadianfEditionfhasfbeenfrevisedfforf Ca
nadianfstudentsfbyfConstantinfColonescu,fMacEwanfUniversity.fThefmultiple-
choicef questionsfwerefwrittenfandfeditedftofconformftofNETAfguidelines,fwhichfemphasizefthe
f developmentfoffhigher-
orderfthinkingfandfthefeffectivefconstructionfoffquestions.fNETAf principlesfoffquestionfconstruc
tionfhelpfeliminatefambiguity,farguablefanswers,fguesswork,f andfunconsciousfcuesftoftest-
savvyfstudents,fresultingfinfaftestfthatfaccuratelyfreflectsfstudentf understanding.fThefTestfBankf
offersfoverf3510fquestions,fincludingfaboutf2822fmultiplef choice,faboutf362ftrue/false,faboutf1
62fproblems,fandfaboutf164fshortfanswerfquestions.
Infadditionftofprovidingfafvarietyfoffquestionsfrelatedftofeachfchapterfobjective,fthisftestfbankf als
ofemploysfafseriesfofftagsfthatfcanfhelpfdesignfeffective,fbalancedftestsfbyfthefmeasurefoff coursef
outcomes.fAllfofftheftagsfarefincludedfwithfthefquestionfinftheftestfbank.fTheseftagsf include:
• ANS:fThefcorrectfanswer.f(Suggestedfanswersfarefprovidedfforfthefshortfanswerfquestions.)
4
