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AP Macroeconomics: Sample FRQs

1. Question:

Impact of Monetary Policy on the Economy
The Federal Reserve uses monetary policy tools, such as the open market operations, the discount rate, and reserve requirements, to influence the economy. In your response, be sure to:

  • Explain how the Federal Reserve uses these tools to affect the money supply.
  • Analyze the potential short-term and long-term effects of an expansionary monetary policy on inflation, employment, and real GDP.
  • Discuss the trade-offs and limitations of monetary policy in achieving macroeconomic goals.

Response Guidelines:

  • Explain how the Federal Reserve controls the money supply through open market operations (buying/selling government bonds), adjusting the discount rate, and modifying reserve requirements.
  • Analyze how expansionary monetary policy (e.g., lowering interest rates, increasing the money supply) can lead to increased spending, higher aggregate demand, and a boost to economic growth in the short run. Discuss how this might also lead to higher inflation.
  • Discuss how monetary policy may be less effective in the long run, especially when interest rates are already low or in situations where inflation expectations are high.
  • Address trade-offs, such as the potential for inflation versus full employment, and limitations like the time lags in policy effectiveness.

2. Question:

Fiscal Policy and Its Effectiveness in Addressing Recessions
Governments can use fiscal policy, through changes in taxation and government spending, to stabilize the economy during a recession. In your response, be sure to:

  • Explain how expansionary fiscal policy works to address a recession.
  • Analyze the impact of an increase in government spending and a tax cut on aggregate demand.
  • Discuss potential limitations or challenges that may affect the effectiveness of fiscal policy in combating a recession.

Response Guidelines:

  • Define expansionary fiscal policy, which includes increasing government spending or reducing taxes to stimulate aggregate demand.
  • Discuss how an increase in government spending directly boosts aggregate demand, while tax cuts lead to higher disposable income for consumers, thereby encouraging more consumption and investment.
  • Analyze the potential limitations, such as the crowding-out effect (where government spending may reduce private sector investment), time lags in implementing fiscal policies, and concerns over increasing the budget deficit and national debt.

3. Question:

Long-Run Economic Growth and the Role of Productivity
In the long run, a country’s economic growth is primarily determined by changes in productivity. In your response, be sure to:

  • Explain the relationship between productivity and economic growth.
  • Identify the factors that contribute to increases in productivity.
  • Discuss the role of government policies in promoting long-term economic growth.

Response Guidelines:

  • Define productivity as the amount of output per worker and explain how increases in productivity lead to higher real GDP and improvements in living standards over time.
  • Identify factors contributing to productivity growth, including technological advances, improvements in human capital, and increases in capital investment.
  • Discuss government policies that can promote long-term growth, such as investing in education, improving infrastructure, and promoting innovation through research and development (R&D) incentives.

Grading Rubric for AP Macroeconomics FRQs

The AP Macroeconomics FRQs are graded on a scale of 0-9, with the rubric focusing on clarity, accuracy, and the application of economic principles to real-world scenarios.

Monetary Policy and the Economy (0-6 points)

  • 0-1 points: The response demonstrates a lack of understanding or only vague references to monetary policy tools, their effects on the economy, and the related outcomes.
  • 2 points: The response provides a basic explanation of the tools used in monetary policy but lacks depth in analyzing their impact or does not clearly link the tools to short-term and long-term effects.
  • 3 points: The response explains the tools used in monetary policy and discusses short-term effects, but may be lacking in analysis of long-term effects or trade-offs.
  • 4 points: The response offers a clear explanation of the monetary policy tools and both short-term and long-term effects on the economy, with some analysis of trade-offs.
  • 5 points: The response demonstrates a thorough understanding of monetary policy, its tools, short-term and long-term effects, and includes a nuanced discussion of trade-offs and limitations.
  • 6 points: The response provides a comprehensive and sophisticated analysis of monetary policy, including detailed explanations of the tools, their impacts, and a nuanced discussion of trade-offs and limitations in achieving macroeconomic goals.

Fiscal Policy and Recessions (0-6 points)

  • 0-1 points: The response demonstrates limited understanding of fiscal policy or does not address its impact on recessions. Key elements are missing or incorrectly explained.
  • 2 points: The response provides a basic understanding of fiscal policy but lacks depth in explaining its effects on aggregate demand or addressing limitations.
  • 3 points: The response explains fiscal policy tools (government spending and tax cuts) but may not fully analyze their effects on aggregate demand or may not discuss limitations in detail.
  • 4 points: The response provides a clear explanation of fiscal policy and its effect on aggregate demand, including a discussion of potential limitations or challenges.
  • 5 points: The response thoroughly explains how fiscal policy works to address recessions, with clear analysis of how government spending and tax cuts affect aggregate demand. Limitations are discussed in detail.
  • 6 points: The response demonstrates a sophisticated understanding of fiscal policy, thoroughly analyzing its effects on aggregate demand and discussing potential limitations and challenges in a nuanced way.

Long-Run Economic Growth and Productivity (0-6 points)

  • 0-1 points: The response lacks a clear explanation of the relationship between productivity and economic growth or provides incorrect or overly vague information.
  • 2 points: The response explains the relationship between productivity and growth but lacks detail in identifying factors that contribute to productivity or does not discuss government policies.
  • 3 points: The response provides a basic understanding of productivity and growth but may not address the factors contributing to productivity or government policies in enough detail.
  • 4 points: The response explains the relationship between productivity and growth, identifies factors that contribute to productivity, and includes a basic discussion of government policies.
  • 5 points: The response thoroughly explains how productivity influences long-run economic growth, identifies specific factors that contribute to productivity, and discusses relevant government policies in detail.
  • 6 points: The response demonstrates a sophisticated understanding of the role of productivity in economic growth, provides specific and relevant factors that contribute to productivity, and offers a detailed discussion of government policies that can promote long-term growth.

Sample Grading Breakdown (for one FRQ)

  • Monetary Policy and the Economy: 5 points
  • Fiscal Policy and Recessions: 6 points
  • Long-Run Economic Growth and Productivity: 5 points
  • Total: 16 points (for all three FRQs combined)

These sample FRQs assess key concepts in AP Macroeconomics, including monetary and fiscal policy, as well as long-run growth factors like productivity. Let me know if you need additional practice or further clarification!