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Multiple-choice and essay tests are the typical test formats used to measure student understanding of economics in college courses. Each type has its features. A multiple- choice (or fixed-response) format allows for a wider sampling of the content because more questions can be given in a testing period. Multiple-choice tests also offer greater efficiency and reliability in scoring than an essay. The major disadvantage of a multiple-choice item is that the fixed responses tend to emphasize recall and encourage guessing. In an essay (or constructed- response) test, students generate responses that have the potential to show originality and a greater depth of understanding of the topic. The essay also provides a written record for assessing the thought processes of the student.
Despite the claimed differences for each format, little empirical work exists to support the suppositions. If a multiple-choice and an essay test that cover the same material measure the same economic understanding, then the multiple-choice test would be the preferred method for assessment because it is less costly to score and is a more reliable measure of achievement in a limited testing period. If, however, an essay test measures unique aspects of economic understanding, then the extra examinee time and substantial scoring costs may be justified.