All AP Macroeconomics Resources
Example Questions
Example Question #4 : Production Possibility Diagrams
Use the diagram below to answer the following question
Which of the following is true about the points in the diagram?
Point and point both exhibit cyclical forms of unemployment
There is no unemployment at point
Unemployment at point is both cyclical and frictional
Unemployment at point consists of both frictional and structural forms of employment
The unemployment at Point is equal to the natural unemployment rate
Unemployment at point consists of both frictional and structural forms of employment
On the PPF, the unemployment rate is equal to the natural rate of unemployment which consists of frictional unemployment and structural employment but excludes cyclical unemployment.
Example Question #41 : Ap Macroeconomics
Use the following graph to answer the questions below:
Which of the following best explains what caused the movement from PPF1 to PPF2?
An increase in the portion of the population joining the military
A change in societal preferences towards consumer goods rather than capital goods
A change in land use from residential use to industrial use
An reduction in cyclical unemployment in the society
An increase in the size of the labour force
An increase in the size of the labour force
The move from PPF1 to PPF2 represents an increase in the productive potential(possibilities) of the economy. This can be effected by an increase in the productive resources in the economy, which would be represented by an increase in the labour force.
Example Question #5 : Production Possibility Diagrams
Use the diagram below to answer the following question:
Which of the following best explains the production possibilities diagram shown?
A technological improvement that makes it cheaper to produce consumer goods
An increase in the size of the labor force
None of the other answers
An economic boom
A shift in preferences of the society away from capital goods and towards consumer goods
A technological improvement that makes it cheaper to produce consumer goods
The diagram shows an increase in the potential productive capacity of the consumer good production without a corresponding increase in the productive capacity of capital good production. The best answer then is that whatever change happened affected only the capacity to produce consumer goods. Labour force increases would increase the capacity to produce both goods, and so would an economic boom.
Example Question #41 : Ap Macroeconomics
Tariffs are used for all of the following EXCEPT __________.
decreasing the total amount of goods imported
restricting trade from foreign producers
raising revenue on imports
creating a more free and open market for the good being taxed
protecting domestic businesses
creating a more free and open market for the good being taxed
A tariff, also known as a "border tax", is a tax placed only on specific goods being imported into a country. A tariff can be used to restrict foreign imports, harm foreign producers in some way, protect domestic businesses, or raise additional revenue. What a tariff never does is open markets and promote absolute free trade.
Example Question #42 : Ap Macroeconomics
The short-run Phillips curve depicts which of the following relationships?
A tradeoff between unemployment and inflation
A direct and positive relationship between unemployment and inflation
A tradeoff between employment and inflation
A direct and positive relationship between employment and the real interest rate
A tradeoff between unemployment and inflation
The short-run Phillips curve indicates an inverse relationship between inflation and unemployment. According to the short-run Phillips curve, as unemployment goes up, inflation goes down, and as inflation goes up, unemployment goes down.
The correct answer is therefore "A tradeoff between unemployment and inflation." Recall that a tradeoff refers to an inverse relationship.
The other answer choices are all distortions of the predictions of the short-run Phillips curve.
Example Question #1 : Short Run Aggregate Supply Curve
Which of the following is the best definition of the concept behind the Phillips Curve?
The relationship between worker pay and productivity.
The relationship between government spending and the multiplier effect
The relationship between unemployment and inflation
The relationship between net exports and GDP
The relationship between unemployment and inflation
The Phillips Curve is meant to express the short-run tradeoff between inflation and unemployment.
Example Question #43 : Ap Macroeconomics
The long-run aggregate supply curve is likely to shift to the right when which of the following occurs?
A higher than estimated multipler effect
An increase in worker productivity due to technological innovation
A decrease in interest rates due to action by the Federal Reserve
An increase in government spending due to government stimulus
An increase in worker productivity due to technological innovation
An increase in worker productivity will result in the supply curve shifting, because it results in the economy having more potential output.
Example Question #44 : Ap Macroeconomics
A rightward shift of the aggregate demand curve will necessarily result in which of the following?
An increase in output and an increase in the price level
A decrease in output and an increase in price level
A decrease in output and a decrease in the price level
An increase in output and a decrease in price level
An increase in output and an increase in the price level
A rightward shift of the demand curve (i.e. an increase of the demand curve) causes price and quantity to increase.
Since the aggregate demand/aggregate supply (AD/AS) model represents price as price level and quantity as output, a rightward shift of the aggregate demand curve results in an increase in the price level and an increase in output.
If you selected "A decrease in output and a decrease in the price level" you may have found the effects after a leftward, rather than rightward, shift of the aggregate demand curve.
Answer choices "An increase in output and a decrease in price level" and "A decrease in output and an increase in price level" are incorrect because shifts in demand cause both price and output to rise simultaneously or fall simultaneously, but never cause price to rise and quantity to fall or price to fall and quantity to rise.
Example Question #1 : Tax Policy
A progressive tax structure is designed in order to put more of the tax burden on _______.
sales tax instead of income tax
individual income instead of corporate profits
wealthier individuals instead of poorer individuals
corporate profits instead of individual income
poorer individuals instead of wealthier individuals
wealthier individuals instead of poorer individuals
A progressive tax system is so-called because, as a person or corporation makes more money, the overall tax burden as a percent of income gets progressively higher. A progressive tax seeks to produce more government revenue from those individuals who are perceived as being more able to bear the burden. Progressive taxation is usually popular politically, making it such a widespread form of taxation.
Example Question #1 : Tax Credits
A tax credit describes an element of tax policy that ________.
allows for an additional tax on goods deemed unseemly
only allows exemptions for people making under a certain income level per year
raises money on investment income
reduces taxes for people who qualify under certain circumstances
allows for an additional tax on specific kinds of income, such as gambling
reduces taxes for people who qualify under certain circumstances
Tax law includes small exemptions and refunds, which are known as tax credits. Often, these tax credits are provided for groups of people like homebuyers, parents, and students. Tax credits are also usually seen as a way to lighten specific tax burdens without rewriting or transforming tax policy.