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2022 Form I宏观经济

Economics HL (合肥六中剑桥国际)

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2022 AP Macroeconomics International Exam Questions

Extrated from the AP Question Bank

Please note: Effective June 1, 2022, some questions from previous AP Macroeconomics Exams may not perfectly align with
the course updates that take effect starting with the May 2023 exam. These questions remain available because teachers indicate
that imperfectly aligned questions still provide instructional value.

Contents
1 Multiple Choice Questions 2

2 Free-Response Questions 13

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MACROECONOMICS
SECTION I
Time—1 hour and 10 minutes
60 Questions

Directions: Each of the questions or incomplete statements below is followed by five suggested answers or comple-
tions. Select the one that is best in each case and then fill in the corresponding circle on the answer sheet.

1. When an economy operates inside its production pos- 4. The real interest rate can remain constant if an in-
sibilities curve, it can increase production of one good crease in transfer payments is accompanied by

(A) at zero opportunity cost in terms of the other (A) a decrease in government purchases
good (B) a decrease in income tax rates
(B) only with an increase in unemployment (C) an increase in reserve requirements
(C) only with an increase in the price level (D) an open-market sale of bonds
(D) only with an increase in technology (E) a decrease in private savings
(E) only if the labor force increases 5. Suppose the only revenue taken in by the government
2. If people save 10 percent of each additional dollar re- is in the form of income taxes and the tax rate is 10
ceived in income, which of the following is true? percent. If national income is $900 billion and gov-
ernment expenditures plus transfers are $120 billion,
(A) The marginal propensity to consume is less than which of the following is true about the government
the marginal propensity to save. budget?
(B) The marginal propensity to consume increases (A) The government budget has a surplus of $780
as income increases. billion.
(C) The marginal propensity to consume is 0.1, and (B) The government budget has a surplus of $120
the maximum value of the tax multiplier is −1. billion.
(D) The marginal propensity to consume equals the (C) The government budget is balanced.
marginal propensity to save.
(D) The government budget has a deficit of $90 bil-
(E) The marginal propensity to consume is 0.9, and lion.
the maximum value of the spending multiplier is (E) The government budget has a deficit of $30 bil-
10. lion.
3. An increase in spending on capital goods will most 6. One reason the aggregate demand curve is downward-
likely lead to which of the following in the long run? sloping is that as the price level increases,
(A) An increase in government spending (A) the purchasing power of assets decreases
(B) An increase in long-run aggregate supply (B) imports decrease
(C) An increase in consumption spending due to (C) the demand for the domestic currency on the for-
crowding out eign exchange market increases
(D) A decrease in employment (D) interest-sensitive expenditures increase
(E) A decrease in economic growth (E) the public feels richer and spends more

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1 Crane 1 Truck
United States 50 hours 25 hours
Thailand 20 hours 30 hours

7. The table provided shows the time required to produce

one crane or one truck in the United States and Thai-
land. The United States and Thailand have the same
amount of resources. Which of the following can be
accurately concluded from the data?

(A) The United States has a comparative advantage

in producing cranes, and Thailand has a compar-
10. Based on the graph provided, which segment repre-
ative advantage in producing trucks.
sents only the expansionary phase of the business cy-
(B) Thailand has a comparative advantage in pro- cle?
ducing cranes, and the United States has a com-
parative advantage in producing trucks. (A) RS
(C) Thailand has a comparative advantage in pro- (B) ST
ducing both cranes and trucks. (C) SU
(D) The United States has a comparative advantage (D) TV
in producing both cranes and trucks.
(E) VW
(E) Neither country has a comparative advantage in
producing cranes and trucks. 11. Which of the following correctly describes spending
in a circular flow model?
8. All of the following concepts can be illustrated using
the production possibilities curve model EXCEPT (A) Households hire resources from producers in re-
source markets.
(A) unemployment
(B) Households purchase goods and services from
(B) inflation producers in product markets.
(C) opportunity cost (C) Households purchase goods and services from
(D) choice producers in resource markets.
(E) scarcity (D) Producers hire resources from households in
product markets.
9. An expansionary monetary policy is intended to elim-
(E) Producers sell resources to households in prod-
inate which type of unemployment?
uct markets.
(A) Frictional
12. If some unemployed individuals become discouraged
(B) Cyclical and stop looking for employment, which of the fol-
(C) Structural lowing will occur in the short run?
(D) Seasonal (A) The unemployment rate will increase.
(E) Natural (B) The unemployment rate will decrease.
(C) The labor force will increase.
(D) Real output will increase.
(E) The labor force participation rate will increase.

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13. Which of the following would NOT be included in the 16. Country X has the following macroeconomic statis-
gross domestic product of the United States in 2018? tics.

(A) The value of computers produced in the United

States in 2018 but not sold Real Output (Billions $) Unemployment Rate (%)
(B) The value of cars produced in the United States 110 1
in 2018 by a Japanese motor company 108 2
(C) The value of cars produced in Japan in 2018 by 106 3
a United States motor company 104 4
102 5
(D) The amount a patient paid to a dentist for dental
100 6
services completed in 2018 in the United States
98 7
(E) The value of a restaurant meal purchased by a
Japanese tourist in 2018 in the United States Suppose the current cyclical unemployment rate is
2%, the frictional unemployment rate is 4%, and the
14. Which of the following individuals benefits from un-
structural unemployment rate is 1%. What is the full-
expected inflation?
employment level of real output?
(A) A retiree living on a fixed pension
(A) $100 billion
(B) A landlord receiving fixed lease payments
(B) $102 billion
(C) A student saving $10 each month in a piggy
(C) $104 billion
bank
(D) $106 billion
(D) A creditor lending out $1,000 as a fixed-rate
loan (E) $110 billion
(E) A debtor making payments on existing fixed- 17. The table provided shows the end-of-year consumer
rate loans price index (CPI) for an economy.
15. Frictional unemployment may be caused by
Year CPI
(A) people losing jobs when their skills become ob- 2008 80
solete 2009 100
2010 105
(B) people quitting jobs to look for better jobs
(C) people dropping out of the job market after a Which of the following statements is true based on the
considerable search information given?
(D) a general downturn in economic activity
(A) The inflation rate in 2009 was 20 percent.
(E) a decrease in aggregate supply
(B) The base year for the price index is 2008.
(C) The inflation rate was higher in 2010 than in
2009.
(D) The inflation rate in 2010 was 5 percent.
(E) Prices of all products rose in 2009 and 2010.

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18. One limitation of using real GDP to measure a na- 22. A reduction in aggregate demand will necessarily
tion’s economic performance is that cause an increase in unemployment in the short run
when
(A) real GDP does not account for inflation
(B) real GDP does not count final goods (A) nominal wages or prices are sticky downward
(C) real GDP estimates an economy’s potential, not (B) nominal wages and prices are flexible
its actual performance (C) the aggregate supply curve is vertical
(D) real GDP does not account for nonmarket trans- (D) the money supply grows at a constant rate
actions (E) imports exceed exports
(E) real GDP understates the rate of unemployment
23. A decrease in nominal wages will cause the
19. Real gross domestic product is equal to which of the
(A) price level to increase
following?
(B) real output to remain the same
(A) Real wages of households
(C) long-run aggregate supply curve to shift to the
(B) Real income plus government transfer payments left
(C) Nominal output adjusted for price-level changes (D) short-run aggregate supply curve to shift to the
(D) Nominal output less depreciation right
(E) Changes in the standard of living (E) aggregate demand curve to shift to the right

24. With an upward-sloping aggregate supply curve, an

increase in government transfer payments will most
Price Quantity Demanded Quantity Supplied
likely
$5 140 20
$10 120 40 (A) reduce the price level
$15 100 60 (B) reduce the level of nominal gross domestic prod-
$20 80 80 uct
$20 60 100
(C) increase real gross domestic product in the short
run
20. Based on the data provided in the table, what is true
about the market for pizza if the current market price (D) shift the short-run aggregate supply curve to the
is $10? right
(E) shift both the aggregate demand curve and the
(A) The supply curve will shift to the left. long-run aggregate supply curve to the left
(B) The demand curve will shift to the right.
25. With an upward-sloping aggregate supply curve, an
(C) The market price for pizza will decrease. increase in government transfer payments will most
(D) There is a shortage of 80 units. likely
(E) There is a surplus of 160 units. (A) reduce the price level
21. In the short run, a contractionary fiscal policy will (B) reduce the level of nominal gross domestic prod-
uct
(A) shift the aggregate demand curve to the left
(C) increase real gross domestic product in the short
(B) shift the short-run aggregate supply curve to the run
right
(D) shift the short-run aggregate supply curve to the
(C) increase the money supply right
(D) increase the demand for loanable funds (E) shift both the aggregate demand curve and the
(E) increase the government budget deficit long-run aggregate supply curve to the left

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26. Which of the following is an example of an automatic 29. If there is no crowding out, a $10 billion increase in
stabilizer that is contractionary? investment in physical capital will most likely lead to
a
(A) A government-legislated increase in the
marginal income tax rate (A) less than $10 billion increase in aggregate sup-
(B) Bond purchases by the nation’s central bank ply
(C) An increase in transfer payments (B) more than $10 billion increase in aggregate de-
mand
(D) An increase in tax revenues as GDP increases
(C) $10 billion increase in aggregate demand
(E) An increase in unemployment compensation
(D) $10 billion increase in aggregate supply
27. Which of the following correctly describes an effec- (E) $10 billion increase in the money supply
tive fiscal policy action to close an inflationary gap?
30. Which of the following will cause an increase in the
(A) Decreasing taxes, which will increase aggregate price level in the short run?
demand
(B) Increasing taxes, which will increase aggregate (A) A rightward shift in the aggregate demand curve
demand (B) A rightward shift in the short-run aggregate sup-
(C) Increasing government spending, which will de- ply curve
crease private investment (C) A rightward shift in the long-run aggregate sup-
(D) Increasing government spending, which will de- ply curve
crease interest rates (D) An increase in savings
(E) Decreasing government spending, which will (E) An increase in imports
decrease aggregate demand
31. What is the most likely short-run effect of an increase
28. Assume that an economy is currently in a recession. in the price of oil, a key input for production?
If policy-makers do nothing and wages and prices are
flexible, which of the following will occur in the long (A) An increase in long-run aggregate supply
run? (B) Demand-pull inflation
(C) A reduction in the unemployment rate
(A) The short-run aggregate supply curve will shift
to the right, leading to full employment. (D) An increase in real gross domestic product
(B) The short-run aggregate supply curve will shift (E) Cost-push inflation
to the left, leading to full employment.
(C) The aggregate demand curve will shift to the
right, leading to full employment.
(D) The aggregate demand curve will shift to the
left, leading to full employment.
(E) The unemployment rate will continue to in-
crease.

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34. Assume that the required reserve ratio is 10 percent

and the banking system has limited reserves. If the
central bank buys $1,000 of bonds from commercial
banks, which of the following will occur?

(A) The money supply will increase by a maximum

of $1,000.
(B) There will be a maximum of $9,000 of new
loans made by all banks.
(C) Demand deposits will increase by a maximum
of $9,000.
(D) The amount of new cash reserves injected into
the banking system will be $100.
(E) The money supply will increase by a maximum
32. Assume the economy is currently in short-run equi-
of $10,000.
librium at point D, as shown in the graph provided,
and that the banking system has limited reserves. 35. Which of the following is counted in the M2 measure,
Which of the following is a monetary policy action but not the M1 measure, of the United States money
that would restore long-run equilibrium? supply?
(A) An open-market purchase of government bonds, (A) Savings accounts
which would move the economy to point C
(B) Currency
(B) An open-market sale of government bonds,
(C) Stocks
which would move the economy to point A
(D) Small time deposits
(C) An increase in the required reserve ratio, which
would move the economy to point C (E) Checkable deposits
(D) An increase in government spending, which 36. An increase in the real interest rate will most likely af-
would move the economy to point C fect private investment in plant and equipment and the
(E) An increase in taxes, which would move the quantity of personal savings in which of the following
economy to point A ways?

33. Assume Bank A has the following balance sheet. (A) Private investment in plant and equipment will
increase, and personal savings will increase.
(B) Private investment in plant and equipment will
increase, and personal savings will decrease.
(C) Private investment in plant and equipment will
decrease, and personal savings will increase.
(D) Private investment in plant and equipment will
If the required reserve ratio is 25 percent, what is the
decrease, and personal savings will not change.
maximum amount by which Bank A can increase its
loans? (E) Private investment in plant and equipment will
not change, and personal savings will decrease.
(A) $0
(B) $25,000
(C) $50,000
(D) $100,000
(E) $150,000

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37. Assume the banking system in a nation has limited 40. Assume the banking system in a nation has limited re-
reserves. Following an unanticipated increase in the serves. When the central bank increases the required
money supply, the price level and real output will reserve ratio, a commercial bank’s
change in which of the following ways in the short
run? (A) excess reserves remain unchanged
(B) excess reserves increase
(A) The price level will increase, and real output will
(C) excess reserves decrease
increase.
(D) required reserves decrease
(B) The price level will increase, and real output will
(E) required reserves remain unchanged
decrease.
(C) The price level will increase, and real output will 41. Which of the following policy actions will offset the
not change. effect of a decrease in investment in plant and equip-
(D) The price level will not change, and real output ment on aggregate demand in the short run in the
will not change. United States?

(E) The price level will decrease, and real output (A) An open-market sale of government bonds
will increase. (B) An increase in marginal income taxes
38. Assume firms increase their borrowing in order to ex- (C) An increase in the required reserve ratio
pand capacity. How will this additional borrowing af- (D) A decrease in government spending
fect the loanable funds market? (E) A decrease in interest on reserves
(A) The supply of loanable funds curve will shift to 42. An increase in real income will cause which of the
the left. following to occur in the short run?
(B) The supply of loanable funds curve will shift to
(A) Imports will decrease.
the right.
(B) Consumption spending will decrease.
(C) The demand for loanable funds curve will shift
to the left. (C) Nominal interest rates will decrease.
(D) The monetary base will increase.
(D) The demand for loanable funds curve will shift
to the right. (E) Money demand will increase.
(E) The loanable funds market will not be affected. 43. Assume that a central bank operating in a banking
system with limited reserves decreases its required re-
39. Which of the following is an example of a contrac-
serve ratio. As a result, demand deposits and total re-
tionary monetary policy action by a central bank?
serves will most likely change in which of the follow-
(A) Increasing interest on reserves ing ways after all adjustments take place in the bank-
ing system and assuming banks lend out all excess
(B) Buying government securities on the open mar-
reserves?
ket
(C) Decreasing government spending (A) Demand deposits will increase, and total re-
serves will increase.
(D) Increasing business taxes
(B) Demand deposits will increase, and total re-
(E) Decreasing the policy rate
serves will not change.
(C) Demand deposits will not change, and total re-
serves will increase.
(D) Demand deposits will decrease, and total re-
serves will not change.
(E) Demand deposits will decrease, and total re-
serves will increase.

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44. Which of the following is true for savings accounts? 47. Increases in public investment in education and in-
creased educational attainment by workers will have
(A) Savings accounts are shares of ownership in a which of the following effects in the long run?
company.
(B) Savings accounts are part of the monetary base. (A) Labor productivity will increase, and real GDP
per capita will increase.
(C) Savings accounts are interest-bearing assets.
(B) Labor productivity will increase, and real GDP
(D) Savings accounts are the most liquid form of fi-
per capita will decrease.
nancial assets.
(C) Labor productivity will increase, and real GDP
(E) Savings accounts are used as tools of monetary
per capita will not change.
policy.
(D) Labor productivity will decrease, and real GDP
45. Assume a country has ample reserves in its banking per capita will increase.
system. Which combination of monetary and fiscal (E) Labor productivity will decrease, and real GDP
policies will necessarily reduce the price level in the per capita will decrease.
short run?
48. Increases in government borrowing to finance in-
(A) Selling bonds through open-market operations creases in budget deficits will most likely result in
and increasing government spending
(B) Increasing administered interest rates and de- (A) a decrease in the real interest rate
creasing government spending (B) a decrease in private domestic investment
(C) Buying bonds through open-market operations (C) a rightward shift in the long-run Phillips curve
and leaving government spending unchanged (D) an increase in the money supply
(D) Decreasing administered interest rates and de- (E) an increase in financial capital outflows
creasing government spending
(E) Decreasing the policy rate and increasing gov- 49. Following a decrease in marginal income tax rates and
ernment spending a decrease in corporate tax rates, which of the fol-
lowing will most likely happen to aggregate demand,
46. Crowding out is most likely to occur with which of short-run aggregate supply, and the price level in the
the following changes? short run?

(A) A decrease in government spending (A) Aggregate demand will increase, there will be
(B) An increase in the government budget surplus no change to short-run aggregate supply, and the
price level will decrease.
(C) An increase in the government budget deficit
(B) Aggregate demand will increase, short-run ag-
(D) A decrease in the real interest rate
gregate supply will decrease, and the price level
(E) A decrease in the trade deficit will decrease.
(C) Aggregate demand will increase, short-run ag-
gregate supply will increase, and there will be
an indeterminate impact on the price level.
(D) There will be no change to aggregate demand,
short-run aggregate supply will increase, and the
price level will increase.
(E) Aggregate demand will decrease, short-run ag-
gregate supply will decrease, and there will be
an indeterminate impact on the price level.

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50. An increase in which of the following will most likely 54. Which of the following statements about the national
lead to long-run economic growth? debt is true?
(A) Transfer payments (A) Interest payments on the national debt are paid
(B) Personal consumption expenditures only when the debt is owned by foreign in-
vestors.
(C) The real interest rate
(D) Exports (B) Gross domestic product minus the national debt
equals net domestic product.
(E) The stock of physical capital
(C) A government budget surplus reduces the na-
51. Movement along the short-run Phillips curve de- tional debt.
scribes the relationship between inflation and unem- (D) A country’s national debt increases when its ex-
ployment when ports exceed its imports.
(A) aggregate demand changes for a given short-run (E) A decrease in interest rates reduces the value of
aggregate supply curve the national debt.
(B) short-run aggregate supply changes for a given
55. If real interest rates in the United States increase rel-
aggregate demand curve
ative to the rest of the world, which of the following
(C) aggregate demand decreases and short-run ag- will occur?
gregate supply increases
(D) aggregate demand increases and short-run ag- (A) Domestic private investment in plant and equip-
gregate supply decreases ment will increase.
(E) policy changes are perfectly anticipated and the (B) The supply of United States dollars in the for-
aggregate supply curve is vertical eign exchange market will increase.
(C) The demand for United States dollars in the for-
52. According to the quantity theory of money, an in-
eign exchange market will increase.
crease in the nominal gross domestic product with
a constant money supply means that the velocity of (D) Net exports in the United States will increase.
money must have (E) The United States capital and financial account
will be in deficit.
(A) increased
(B) decreased 56. Japan and the European Union are trading partners
(C) not changed with flexible exchange rates. The currency of Japan
is the yen, and the currency of the European Union is
(D) initially increased, then decreased
the euro. Which of the following will happen in the
(E) initially decreased, then increased foreign exchange market if Japan increases its imports
from Europe?
53. Which of the following is true for a long-run Phillips
curve? (A) A depreciation of the euro
(A) It represents points for which expected and ac- (B) An increase in the supply of the euro
tual inflation rates are equal. (C) An increase in the demand for the euro
(B) It shifts to the left when aggregate supply de- (D) An increase in the demand for the yen
creases.
(E) A decrease in the supply of the yen
(C) It shifts to the left when money supply de-
creases.
(D) It shifts to the right when transfer payments de-
crease.
(E) It is horizontal because there is no change in in-
flation.

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59. Under a flexible exchange-rate system, the exchange

rate between two countries’ currencies is determined
by the

(A) amount of gold reserves held by the central bank

in each country
(B) gross domestic product of the exporting country
(C) demand for and supply of each country’s cur-
rency
(D) amount of resources available to the importing
country
57. The United States and the United Kingdom are trad-
ing partners with flexible exchange rates. The cur- (E) real interest rate in the exporting country
rency of the United States is the dollar ($), and the 60. The current account portion of a nation’s balance of
currency of the United Kingdom is the pound (£). The payments accounts includes
graph provided shows the foreign exchange market
for the pound. At an exchange rate of $2 per pound, (A) foreign direct investment
which of the following will occur? (B) purchases of foreign bonds
(A) There will be excess supply of the dollar. (C) purchases of foreign real estate
(B) There will be excess demand for the pound. (D) holdings of foreign currencies
(C) The pound will appreciate. (E) exports of services
(D) The dollar will appreciate.
(E) A £2 souvenir in Britain will cost $1 for United
States tourists.
58. The United States and the European Union are trading
partners with flexible exchange rates. The currency of
the United States is the dollar ($), and the currency of
the European Union is the euro. Which of the follow-
ing is true if the exchange rate between the euro and
the dollar changes from $1.00 per euro to $1.25 per
euro?
(A) United States exports to Europe will increase.
(B) European exports to the United States will in-
crease.
(C) The dollar has appreciated.
(D) The euro has depreciated.
(E) The money supply in the United States will in-
crease.

STOP
END OF SECTION I

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MACROECONOMICS
SECTION II
Total Time—1 hour
Reading Period—10 minutes
Writing Period—50 minutes
3 Questions

Directions: : You are advised to spend the first 10 minutes reading all of the questions and planning your answers.
You will then have 50 minutes to answer all three of the following questions. You may begin writing your responses
before the reading period is over. It is suggested that you spend approximately half your time on the first question
and divide the remaining time equally between the next two questions. Include correctly labeled diagrams, if
useful or required, in explaining your answers. A correctly labeled diagram must have all axes and curves clearly
labeled and must show directional changes. If the question prompts you to “Calculate,” you must show how you
arrived at your final answer. Use a pen with black or dark blue ink.

You may plan your answers in this orange booklet, but no credit will be given for anything written in this booklet.
You will only earn credit for what you write in the separate Free Response booklet.

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1. Assume the United States economy is currently facing an inflationary gap of $500 billion, a natural rate of unemployment
of 5 percent, and an actual rate of inflation of 4 percent.

(a) Using the relevant numerical values given above, draw a correctly labeled graph of the short-run Phillips curve and
the long-run Phillips curve. Label the current short-run equilibrium as point X. Plot the relevant numerical values
given above on the graph.
(b) Suppose the federal government decreases government spending without changing taxes, and the marginal propen-
sity to consume is 0.8.
i. Calculate the minimum decrease in government spending needed to change aggregate demand by the amount
of the output gap. Show your work.
ii. Based solely on the decrease in government spending, what will happen to the short-run Phillips curve in the
short run?
iii. Based solely on the decrease in government spending, what will happen to the equilibrium real interest rate in
the loanable funds market? Explain.
iv. The United States and Mexico are trading partners with flexible exchange rates. The currency of Mexico is the
peso and the currency of the United States is the dollar. Draw a correctly labeled graph of the foreign exchange
market for the dollar, and show the impact of the real interest rate change from part (b) (iii) on the international
value of the dollar.
(c) Assume instead the government chooses to decrease government spending by $500 billion and decrease income
taxes by $500 billion.
i. What will be the numerical value and direction of the maximum change in aggregate demand?
ii. What will happen to the demand for loanable funds? Explain.
(d) In the absence of any policy actions to correct the inflationary gap, what will happen to real gross domestic product
in the United States in the long run? Explain.

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2. Assume the required reserve ratio in the country of Rayogi is 5 percent, and the banking system in Rayogi has limited
reserves.

(a) If Rayogi’s central bank sells $10 million of securities to commercial banks and the commercial banks pay for the
securities out of their reserves, calculate the maximum possible change in the money supply. Show your work.
(b) Draw a correctly labeled graph of the money market, and show the effect of the change in the money supply identified
in part (a) on the equilibrium nominal interest rate in Rayogi.
(c) Assume no change in inflationary expectations. Based on the change in the nominal interest rate identified in part
(b), what will happen to the real interest rate in Rayogi?
(d) Based on your answer to part (c), what will happen to the economic growth rate in Rayogi? Explain.

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3. In the country of Zuma, the natural rate of unemployment is 5 percent, the actual rate of unemployment is 10 percent, and
the nominal interest rate is 3 percent.

(a) Zuma produces two goods: food and capital goods. Draw a correctly labeled production possibilities curve for Zuma
with food on the horizontal axis and capital goods on the vertical axis. Indicate a point on your graph, labeled W,
which represents the current state of the economy.
(b) Should the government increase, decrease, or keep income taxes unchanged to move the economy toward potential
output? Explain.
(c) On your graph in part (a), show another point, labeled Y, which shows the effect of the change in income taxes
identified in part (b).
(d) Suppose now there is an improved method of producing food only.
i. Show the effect of this new method of production on your graph in part (a), labeling the new production possi-
bilities curve as PPC2 .
ii. Based on your answer to part (d) (i), what happens to the opportunity cost of producing capital goods?

STOP
END OF EXAM

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