AP Macroeconomics practice test
Practice questions for all six AP Macroeconomics units: basic concepts, economic indicators, aggregate demand and supply, the financial sector, stabilization policy and the open economy. Answer in your browser and read why each answer is right.
Question 1 of 23
What is opportunity cost?
Question 2 of 23
A point inside a country's production possibilities curve represents
Question 3 of 23
A country has a comparative advantage in a good when it
Question 4 of 23
A price ceiling set below the equilibrium price causes
Question 5 of 23
Which is counted in this year's GDP?
Question 6 of 23
How is the unemployment rate calculated?
Question 7 of 23
The CPI rises from 100 to 105 in a year. What is the inflation rate?
Question 8 of 23
A graduate is searching for her first job. What type of unemployment is this?
Question 9 of 23
Why do economists use real GDP rather than nominal GDP to compare output over time?
Question 10 of 23
The marginal propensity to consume (MPC) is 0.8. What is the spending multiplier?
Question 11 of 23
An increase in government spending shifts
Question 12 of 23
A sharp rise in oil prices shifts short-run aggregate supply to the left. What happens in the short run?
Question 13 of 23
Which change would shift short-run aggregate supply to the right?
Question 14 of 23
The Federal Reserve buys government bonds on the open market. What happens?
Question 15 of 23
The reserve requirement is 10%. What is the money multiplier?
Question 16 of 23
Which of these is part of M1?
Question 17 of 23
The nominal interest rate is 7% and expected inflation is 3%. What is the expected real interest rate?
Question 18 of 23
What is the shape of the long-run Phillips curve?
Question 19 of 23
Government borrowing to fund a deficit raises interest rates and reduces private investment. This is called
Question 20 of 23
Which is an example of expansionary fiscal policy?
Question 21 of 23
The current account of the balance of payments includes
Question 22 of 23
US interest rates rise relative to other countries. What happens to the dollar?
Question 23 of 23
If the US dollar appreciates, what happens to US exports and imports?
AP Macroeconomics key terms
Flip through these flashcards to review the terms that come up most often. Use the arrow keys or click a card to flip it.
| Opportunity cost | The value of the next best alternative given up. |
| GDP (expenditure approach) | GDP = C + I + G + Xn |
| Unemployment rate | Unemployed ÷ labor force × 100 |
| Natural rate of unemployment | Frictional + structural unemployment; no cyclical unemployment. |
| Spending multiplier | 1 / (1 − MPC) = 1 / MPS |
| Tax multiplier | −MPC / MPS |
| Money multiplier | 1 / reserve requirement |
| Real interest rate | Nominal interest rate − expected inflation |
| Expansionary monetary policy | Buy bonds, lower the discount rate or reserve requirement, lower interest on reserves. |
| Crowding out | Deficit spending raises interest rates and reduces private investment. |
| Long-run Phillips curve | Vertical at the natural rate of unemployment. |
| Stagflation | Rising price level with falling output, usually from a negative supply shock. |
| Currency appreciation | Makes exports more expensive and imports cheaper, so net exports fall. |
See all 13 cards
Opportunity costThe value of the next best alternative given up.
GDP (expenditure approach)GDP = C + I + G + Xn
Unemployment rateUnemployed ÷ labor force × 100
Natural rate of unemploymentFrictional + structural unemployment; no cyclical unemployment.
Spending multiplier1 / (1 − MPC) = 1 / MPS
Tax multiplier−MPC / MPS
Money multiplier1 / reserve requirement
Real interest rateNominal interest rate − expected inflation
Expansionary monetary policyBuy bonds, lower the discount rate or reserve requirement, lower interest on reserves.
Crowding outDeficit spending raises interest rates and reduces private investment.
Long-run Phillips curveVertical at the natural rate of unemployment.
StagflationRising price level with falling output, usually from a negative supply shock.
Currency appreciationMakes exports more expensive and imports cheaper, so net exports fall.
About the AP Macroeconomics exam
- Section I: 60 multiple-choice questions in 70 minutes, about two-thirds of the score.
- Section II: 3 free-response questions (1 long, 2 short) in 60 minutes including a 10-minute reading period, about one-third of the score.
- Free-response questions expect correctly labeled graphs: AD-AS, the money market, loanable funds, the Phillips curve and foreign exchange.
Questions
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No. They are original practice questions written to match the topics and style of the AP Macroeconomics course. For released exam questions, see AP Central from the College Board.
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