The Spaniard believes the north London side can underline their Premier League title credentials on Sunday when they face Roberto Mancini's men at the Etihad Stadium
The Gunners are in the midst of a five-game unbeaten run in all competitions, and have conceded just one goal in four Premier League matches.
And Arteta believes that if the Gunners can add three more points to their tally this weekend, they can seriously be considered as Premier League contenders.
|GUNNER DO IT
|10/1||Arsenal are 10/1 to win the Premier League this season with Bet365|
"It's a huge test for us. We've been playing well. We played really good when we went to Liverpool - that's a tough place to get three points but we did it.
"This is another test. Man City haven't lost at home for a while. We know it's going to be difficult but I'm sure they will be thinking the same thing.
"A win grows the confidence of the team and everyone around it who believes we are as good as anyone in this league. These are good places to show that."
The Spaniard did express his belief, however, that Roberto Mancini's men will be looking to bounce back from their defeat to Real Madrid in the Champions League.
"It can be like, 'Oh now we need a win to put that on the side'," Arteta said. "To be honest, City created a lot of problems for Real Madrid and they went into the last 10 or 15 minutes of the game ahead of them at the Bernabeu, which is not easy at all.
"We know how good they are, how good their players are and how tough they're going to make it for us. At the same time, they will be a bit scared as well."