One of the best ways to promote and assess higher-order thinking is to use scenario-based questions. This changes a question from requiring simple recall to, at the very least, requiring the application of knowledge. This strategy particularly, can be used in most disciplines. You can also ask more than one multiple-choice question based on a single scenario/ case study.
“Because of rapidly rising national defence expenditures, it is anticipated that Country A will experience a price inflation unless measures are taken to restrict the growth of aggregate private demand. Specifically, the government is considering either (1) increasing personal income tax rates or (2) introducing a very tight monetary policy.” If the government of Country A wishes to minimize the adverse effect of its anti-inflationary policies on economic growth, which one of the following policies should it use?
a. The tight money policy because it restricts consumption expenditures more than investment.
b. The tight money policy, since the tax increase would restrict consumption expenditures.
c. The personal income tax increase since it restricts consumption expenditures more than investment.
d. Either the tight money policy or the personal income tax rate increase since both depress investment equally.