AP Macroeconomics UPDATED Actual Exam Questions and CORRECT Answers

AP Macroeconomics UPDATED Actual
Exam Questions and CORRECT Answers
Movement on Short-Run Phillips Curve - CORRECT ANSWER- ✔✔Shift in AD (graph
movement is in opposite direction)


Shift of Short-Run Phillips Curve - CORRECT ANSWER- ✔✔Shift in SRAS (shift is in
opposite direction)


Shift of Long-Run Phillips Curve - CORRECT ANSWER- ✔✔Factors of Production/Shift in
LRAS (shift is in opposite direction)


Factors of Production - CORRECT ANSWER- ✔✔1. Land
2. Labor
3. Capital
4. Technology
5. Sometimes Foreign Trade


Shifters of Demand for Loanable Funds - CORRECT ANSWER- ✔✔1. Incentive to Invest
2. Contractionary Fiscal Policy (to the right)


Shifters of Supply of Loanable Funds - CORRECT ANSWER- ✔✔1. Incentive to Save
2. Monetary Policy
3. Expansionary Fiscal Policy (to the left)


Shifters of Money Supply - CORRECT ANSWER- ✔✔Monetary Policy



Shifters of Money Demand - CORRECT ANSWER- ✔✔1. Price Level
2. Income
3. Fiscal Policy

,Shifters of Long-Run Aggregate Supply - CORRECT ANSWER- ✔✔Factors of Production



Shifters of Short-Run Aggregate Supply - CORRECT ANSWER- ✔✔1. Factors of
Production (LRAS)
2. Input Costs
3. Supply Shock


Shifters of Aggregate Demand - CORRECT ANSWER- ✔✔1. GDP (or its components)
2. Monetary Policy
3. Fiscal Policy


PPC Graph - CORRECT ANSWER- ✔✔



Demand and Supply Graph - CORRECT ANSWER- ✔✔



Business Cycle - CORRECT ANSWER- ✔✔



Short Run AD/AS Graph - CORRECT ANSWER- ✔✔



Money Market Graph - CORRECT ANSWER- ✔✔



Loanable Funds Graph - CORRECT ANSWER- ✔✔



Investment Demand Graph - CORRECT ANSWER- ✔✔



Foreign Exchange Graph - CORRECT ANSWER- ✔✔



Phillips Curve - CORRECT ANSWER- ✔✔

, GDP = C + I + G + Xn - CORRECT ANSWER- ✔✔The expenditure approach to measuring
GD correlates well with aggregate demand (AD)


GDP = W + I + R + P - CORRECT ANSWER- ✔✔The income approach to measuring GDP
correlates well with aggregate supply


Calculating Nominal GDP - CORRECT ANSWER- ✔✔The quantity of various goods
produced in a nation times their current prices, added together.


GDP Deflator - CORRECT ANSWER- ✔✔A price index used to adjust nominal GDP to
arrive at real GDP. Called the "deflator" because nominal GDP will usually overstate the
value of a nation's output if there has been inflation. The Consumer Price Index (CPI) is
another commonly used price index.


GDP Growth Rate: - CORRECT ANSWER- ✔✔( Current year's GDP - Last year's GDP)/
(Last year's GDP) x 100. The GDP growth rate is a percentage change in a nation's real
output between one year and the next.


The Inflation Rate via the CPI - CORRECT ANSWER- ✔✔(This year's CPI - Last year's
CPI)/(Last year's CPI) x 100. The inflation rate is the percentage change in the CPI from one
period to the next.


Real Interest Rate - CORRECT ANSWER- ✔✔the interest rate corrected for the effects of
inflation; Nominal interest rate - inflation rate


Unemployment Rate - CORRECT ANSWER- ✔✔(Number of unemployed/Number in the
labor force) x 100. The labor force includes all non-institutionalized people of working age
who are employed or seeking employment.


Money Multiplier - CORRECT ANSWER- ✔✔1/RRR where RRR equals the required
reserve ratio. Application: an initial injection of $1,000 of new money into a banking system
with a reserve ratio of 0.1 will generate up to $1,000 x (10) = $10,000 in total money.