AP Macroeconomics FRQ Room

Comparative Advantage and Gains from Trade

This question explores the concepts of absolute and comparative advantage, and how specialization an

Comparative Advantage and Trade Decisions

This question examines the concepts of absolute and comparative advantage and their implications for

Comparative Advantage in International Trade

Examine the role of comparative advantage in determining specialization and trade between countries.

Comparing Microeconomics and Macroeconomics

This question explores the different scopes of microeconomics and macroeconomics and their relevance

Consumer Preferences and Demand Shifts

Analyze how changes in consumer income and tastes affect demand using a demand and supply framework.

Demand Analysis in a Competitive Market

This question focuses on the demand concept, including shifts due to income changes and substitutes.

Determinants of Supply and Shifting Curves

This question focuses on understanding the determinants of supply and the difference between movemen

Economic Efficiency: Productive and Allocative Efficiency

This question focuses on the concepts of productive and allocative efficiency and their relation to

Economic Growth and Efficiency

This question focuses on the relationship between economic growth, technological advancements, and e

Factors of Production and Economic Growth

This question focuses on identifying the factors of production and understanding how improvements in

Fiscal Policy Impact on AD-AS

Examine the effects of a government policy that reduces government spending by $50 billion on the ag

FRQ 2: Production Possibilities Curve Analysis

This question explores the Production Possibilities Curve (PPC), including its shape, opportunity co

FRQ 6: Supply Determinants and Market Response

Analyze how various determinants of supply influence market equilibrium using the provided table on

FRQ 8: Technological Advancements and Production Possibilities

Explore the impact of technological improvements on production possibilities and opportunity costs.

FRQ 9: Government Intervention in Cases of Market Failure

Analyze the concept of market failure and discuss the role of government intervention in achieving a

FRQ 15: Supply Shift Due to Increased Production Costs

Analyze how a rise in production costs affects the supply curve and the subsequent market equilibriu

FRQ 16: Demand and Supply Interaction in a Competitive Market

Using the provided market data, analyze the interaction between demand and supply to determine the m

FRQ 20: Strategic Resource Allocation in a Competitive Firm

A firm faces limited resources and must allocate them between producing Product A and Product B. Ana

Impact of Taxes on Supply and Demand

This question examines the impact of indirect taxes on both supply and demand in a market. Answer th

Impact of Technology on Production Possibilities and Economic Growth

This question examines how technological advancements can shift the Production Possibilities Curve (

Inflation and the Phillips Curve

Analyze the relationship between inflation and unemployment using the Phillips Curve, especially in

Input Versus Output Analysis in Production

This question focuses on production functions and the concept of opportunity cost in reallocating re

International Trade and Exchange Rates

Examine the role of comparative advantage in international trade and analyze the impact of exchange

International Trade and Terms of Trade

This question examines the concept of terms of trade and its implications in international economics

International Trade and Terms of Trade

Analyze the benefits of international trade by evaluating comparative advantage and terms of trade b

Interpreting the PPC Slope and Opportunity Cost

The slope of a Production Possibilities Curve (PPC) is a measure of opportunity cost. Suppose a PPC

Investment and the Loanable Funds Market

Examine how changes in national saving and government borrowing affect the loanable funds market and

Loanable Funds Market Impact

Examine the functioning of the loanable funds market. Use data, graphs, and economic analysis to ans

Market Equilibrium and Shifts in Demand and Supply

Answer the following questions to demonstrate your understanding of market equilibrium and the effec

Opportunity Cost Calculation Problem

This question tests your understanding of opportunity cost. Answer each part with definitions, calcu

Opportunity Cost in Personal and Economic Decisions

This question explores the concept of opportunity cost in the context of individual decision making

Opportunity Cost in Production Decisions for Firms

This question investigates how a firm makes production decisions by analyzing opportunity costs when

PPC and Economic Growth

In this question, you will analyze an economy's production possibilities and explore the concept of

Price Ceiling Impacts in the Housing Market

This question examines the impact of government-imposed price ceilings on market outcomes. Consider

Production Possibilities Curve Analysis

This question focuses on the Production Possibilities Curve (PPC) and its implications for opportuni

Production Possibilities Curve and Economic Growth

This question examines the Production Possibilities Curve (PPC) and its implications for efficiency

Scarcity and Opportunity Cost in Resource Allocation

This question evaluates your understanding of the concepts of scarcity and opportunity cost as they

Scarcity and Prioritization in Public Policy

This question examines how scarcity influences government spending decisions and the trade-offs that

Scarcity, Choice, and Opportunity Cost in Everyday Decisions

Scarcity forces individuals to make choices due to limited resources. In this question, consider a s

Supply Analysis and Shifts

Analyze the determinants of supply and the impact of factors such as technology on the supply curve.

Supply Determinants and Shifts in the Supply Curve

This question tests your understanding of the determinants of supply and how they shift the supply c

Supply Shock and AD-AS Model

A sudden spike in oil prices leads to a negative supply shock in the economy. Analyze the effects of

Tax Implications on Supply Decisions in the Tobacco Industry

Consider a scenario where the government imposes an excise tax on tobacco products. This tax increas

Technology and Supply: Market Response

In this question, analyze the impact of a technological breakthrough on the supply side of a market.

Understanding Ceteris Paribus in Demand Analysis

Ceteris paribus ("all else equal") is a key assumption in economics when analyzing the demand for a

Understanding Market Disequilibrium: Surpluses and Shortages

This question explores market disequilibrium through the analysis of surpluses and shortages using p

AD-AS Framework and Consumer Spending Shock

Analyze an economy's response to a decrease in consumer spending using the aggregate demand and aggr

Analyzing CPI and Inflation

Consider a simplified economy where the Consumer Price Index (CPI) in Year A is 150 and in Year B is

Analyzing the Circular Flow Model and GDP Computation

This question asks you to analyze the circular flow model, compute GDP in a closed economy, and disc

Business Cycle Dynamics and Fiscal Policy Response

Examine the phases of the business cycle using the provided real GDP graph and propose appropriate f

Calculating Real GDP Growth and Economic Performance

Using the relationship $$\%\,\Delta\,\text{Real GDP} = \%\,\Delta\,\text{Nominal GDP} - \%\,\Delta\,

Circular Flow and Economic Activity

Use the circular flow model to explain how economic activity circulates in a closed economy and disc

Comparing Nominal GDP and Real GDP

Consider the following scenario: In Year 1, a country has a nominal GDP of $1,000 billion and a pric

Comparing the CPI and GDP Deflator

Differentiate between the Consumer Price Index (CPI) and the GDP deflator, and use the GDP deflator

Costs of Inflation and Their Impact

Inflation carries several costs that can affect businesses and households. Answer the following: Pa

Costs of Inflation: Menu Costs and Shoe-Leather Costs

Examine the costs associated with inflation and illustrate their impacts on both consumers and firms

CPI Methodology Critique: Substitution Bias and Quality Adjustments

Critically evaluate the methodology behind the Consumer Price Index (CPI), with a focus on substitut

Effects of Inflation on Interest Rates and Costs

Inflation alters interest rates and imposes various costs on the economy. Analyze these relationship

Effects of Unexpected Inflation on Economic Agents

Unexpected inflation can have varied effects on different groups in the economy. Answer the followin

Evaluating Business Cycle Indicators

This question explores alternative indicators used to predict and evaluate business cycles beyond GD

Fiscal Policy and Real GDP: A Multiplier Analysis

This question requires you to explain the fiscal multiplier concept, perform a calculation using giv

GDP and Its Limitations

This question tests your understanding of nominal versus real GDP, the limitations of GDP as a measu

GDP Components and Calculation

Analyze how GDP is calculated using the expenditure approach. Evaluate the contributions of consumer

GDP Deflator Calculation and Comparison with CPI

Calculate the GDP deflator given nominal and real GDP values, and compare its scope with that of the

GDP Deflator versus CPI Comparison

Explain the differences between the Consumer Price Index (CPI) and the GDP Deflator in measuring inf

GDP Deflator vs. CPI: Comparative Analysis

Compare and contrast the GDP deflator and the Consumer Price Index (CPI) in terms of their compositi

GDP Limitations and the Shadow Economy

GDP is a widely used measure to gauge economic performance, yet it has several limitations. Answer t

Graphical Analysis of a Business Cycle

Analyze a business cycle using the provided graph and data. Answer the following: Part A: Examine t

Impact of Government Spending on GDP

This question explores how changes in government spending affect GDP and discusses potential seconda

Impact of Inflation Expectations on Interest Rates

Assess the role of inflation expectations in determining nominal interest rates and discuss the impl

Increase in Government Spending and Its Multiplier Effect

This question assesses your understanding of the multiplier effect in the context of government spen

Inflation and Its Impact on Labor Markets

Discuss how inflation affects labor markets, particularly the adjustment of wages and employment lev

Inflation Expectations and Borrowing: A Fisher Equation Application

Calculate nominal interest rates using the Fisher equation and analyze the effects of unexpected inf

Inflation’s Impact on Real Income and Purchasing Power

This question explores the relationship between nominal and real income in the context of inflation

Investment Spending and the Multiplier Effect

Examine how changes in investment spending can have amplified effects on the economy through the mul

Labor Force Participation and Economic Analysis

Using provided data, calculate the labor force participation rate (LFPR) and analyze its significanc

Limitations of GDP as an Economic Indicator

GDP is widely used to gauge economic performance, but it has several limitations. Answer the followi

Loanable Funds Market and Saving Behaviors

Examine the effect of increased government borrowing on the loanable funds market. Answer the follow

Nominal vs. Real Income: Analysis of Purchasing Power

Examine the differences between nominal and real income. Calculate the effect of inflation on real i

Real Income and Purchasing Power

Discuss the distinctions between nominal income and real income, and analyze how changes in the Cons

Real Income and Purchasing Power Analysis

Evaluate the impact of inflation on real income and, by extension, on purchasing power using the pro

Real vs. Nominal GDP Analysis

This question seeks to test your understanding of the concepts of nominal and real GDP, to perform a

Relationship Between GDP and Aggregate Income

GDP and Aggregate Income (AI) are closely related concepts in macroeconomics. Answer the following:

The Value-Added Approach to GDP Calculation

Explain the value-added approach to calculating GDP. Use a multi-stage production process to demonst

Types of Unemployment and Policy Responses

Analyze different types of unemployment and propose a policy to address structural unemployment.

Understanding Structural Unemployment

This question focuses on structural unemployment, including its causes, graphical representation, an

Unemployment and Discouraged Workers

Analyze how the presence of discouraged workers affects the official unemployment rate and the perce

Unemployment Measurement and Analysis

Accurately measuring unemployment is critical for understanding economic health. Use the data and co

Unemployment Rates and Labor Force Participation

This question asks you to calculate labor force participation rates based on provided data while dis

Unemployment-Inflation Trade-Off: Phillips Curve Analysis

Analyze the relationship between unemployment and inflation using the Phillips Curve framework. Prov

AD-AS Equilibrium and the Impact of Market Expectations

This question investigates how market expectations, particularly regarding inflation, can affect the

Aggregate Demand Components and Real GDP

Aggregate demand (AD) consists of several components that determine the overall level of economic ac

AS Shifts and Economic Equilibrium

Consider the following scenario regarding the aggregate supply side of the economy. (a) Draw and la

Automatic Stabilizers and Their Impacts on Economic Fluctuations

This question focuses on the role of automatic stabilizers in mitigating economic fluctuations durin

Contractionary Fiscal Policy and Its Economic Impact

This question focuses on contractionary fiscal policy and its role in cooling an overheated economy.

Deregulation and Its Impact on SRAS

Evaluate how deregulation in a specific industry affects short-run aggregate supply (SRAS). Analyze

Detailed Multiplier Analysis in a Fiscal Stimulus Scenario

This question challenges you to perform multiplier calculations and analyze the effects of a fiscal

Dynamic Adjustment of the Economy in Response to Fiscal Stimuli

Analyze the dynamic process by which an initial fiscal stimulus propagates through the economy, and

Dynamic Effects of Fiscal Policy on the AD Multiplier

Analyze the dynamic effects of expansionary fiscal policy in the context of the spending multiplier.

Fiscal Stimulus and the Spending Multiplier: Policy Evaluation

This question explores the concept of the fiscal spending multiplier and its implications for design

Fiscal Stimulus: Spending vs. Tax Multipliers

Matthew, an economist, is evaluating a fiscal stimulus strategy. Given that the marginal propensity

FRQ 1: Money Market and Monetary Policy

This question examines your understanding of the money market and the effects of an expansionary mon

FRQ 5: Equilibrium in the AD-AS Model: Recessionary and Inflationary Gaps

Analyze the differences between recessionary and inflationary gaps in the AD-AS framework and illust

FRQ 7: Fiscal Policy and Its Impact on Aggregate Demand

Fiscal policy tools such as government spending and tax cuts are used to influence aggregate demand.

FRQ 11: Interest Rate Effect on Investment Spending

Examine the interest rate effect and its impact on investment spending in the macroeconomy.

FRQ 13: Impact of Consumer Sentiment on Aggregate Demand

Consumer sentiment plays a vital role in determining the consumption component of aggregate demand.

FRQ 18: Comparing Spending and Tax Multipliers with Numerical Example

This question explores the numerical relationships between spending and tax multipliers. Part A: If

FRQ 18: Policy Interventions during Inflation: A Fiscal Perspective

Discuss the fiscal policy interventions that can be used to address an inflationary gap, including p

GDP Equilibrium in the AD-AS Model: Recessionary Gap and Self-Correction

This question examines the concept of macroeconomic equilibrium in the AD-AS model, particularly in

Graphing Fiscal Policy Effects on the AD-AS Model

Fiscal policy is a fundamental tool for addressing output gaps. Evaluate how an expansionary fiscal

Impact of Tax Policy on Aggregate Demand

Discuss how tax policy changes influence aggregate demand through the tax multiplier, and evaluate i

Impact of Technology on Long-Run Aggregate Supply

Technological improvements can transform an economy's production capacity over time. (a) Describe h

Impact of Trade Wars on Domestic Aggregate Demand

A trade war between major economies affects export and import volumes. Assess the impact of these ch

Input Price Shocks and the SRAS Curve

Analyze the impact of an unexpected increase in economy-wide input prices on the short-run aggregate

Interest Rate and Wealth Effects in AD

Examine the roles of the interest rate effect and the wealth effect in shaping the aggregate demand

Interpreting Macro Data: Consumption, Investment, Government Spending, and Net Exports

This question involves analyzing macroeconomic data to compute aggregate demand and gain insights in

Investment and Net Exports: Their Effect on Aggregate Demand

Global economic slowdowns have resulted in a $50 billion decline in net exports, and firms are delay

Long-Run Aggregate Supply (LRAS) and Economic Growth

Discuss the concept of Long-Run Aggregate Supply (LRAS) and its significance in explaining economic

Long-Run Aggregate Supply and Economic Growth

This question tests your understanding of how improvements in technology and resource availability a

Long-Run Aggregate Supply: Economic Growth and Productivity

Discuss the determinants that shift the long-run aggregate supply (LRAS) curve and their roles in pr

Long-Run Self-Adjustment Mechanism in AD-AS

Analyze the long-run self-adjustment process in the AD-AS model that allows an economy to return to

Mixing Fiscal Policies: Tax Cuts and Increased Spending

An economy faces an output gap of $60 billion. The government is considering a mix of tax cuts and i

Multiplier Effects: Spending vs Tax Multipliers

Analyze the multiplier effect in the macroeconomy. Differentiate between the spending multiplier and

Negative Supply Shock and Its Impact on SRAS

A sudden increase in oil prices has led to a rapid rise in production costs, causing a negative supp

Real vs. Nominal GDP: Analysis

This question distinguishes between nominal and real GDP and examines their implications for underst

Recessionary and Inflationary Gaps

Using the AD-AS model, analyze the concepts of recessionary and inflationary gaps and discuss their

Recessionary and Inflationary Gaps and Self-Adjustment Mechanisms

Examine how the economy self-adjusts to recessionary and inflationary gaps using the AD-AS framework

Shifts in Short-Run Aggregate Supply Due to Input Price Changes

This question focuses on understanding how changes in input prices impact the short-run aggregate su

Short-Run Adjustment and AS Shocks

The economy often undergoes self-adjustment in the short run after experiencing shocks. Analyze the

Short-Run Aggregate Supply Shocks and Economic Outcomes

This question assesses your understanding of how fluctuations in input prices affect Short-Run Aggre

Tax Cuts and GDP: Multipliers in Action

A government implements a tax cut of $40 billion in an economy where the marginal propensity to cons

The Role of Consumer Confidence in Shifting Aggregate Demand

This question explores how shifts in consumer confidence affect aggregate demand and, as a result, t

Wage Increases and SRAS Shifts

Due to rising labor market pressures, wages increase significantly across major industries, raising

Wage-Setting Behavior and Shifts in SRAS

Analyze how inflation expectations influence wage-setting behavior and subsequently shift the short-

Bank Balance Sheet and Fractional Reserve Banking

Analyze a bank's balance sheet using a T-account and explain the effect of fractional reserve bankin

Central Bank Communication and Market Expectations

Discuss the role of central bank communication in shaping market expectations, and analyze its effec

Debt Financing vs. Equity Financing for Firms

Firms can raise capital through debt financing or equity financing. Answer the following questions r

Debt vs. Equity Financing: Trade-offs and Market Conditions

A company must decide between raising funds via debt (issuing bonds) or equity (issuing stock). Answ

Deficit Spending and Loanable Funds Demand

This question focuses on how government deficit spending influences the demand for loanable funds. A

Deflation and Real Interest Rates

Explore how deflation influences the real interest rate and the behavior of borrowers and savers in

Effective Money Multiplier under Varying Conditions

The theoretical money multiplier can be affected by factors such as excess reserves and currency hol

Equity Financing vs Debt Financing

Evaluate the advantages and disadvantages of equity and debt financing for a firm facing investment

Equity vs. Debt Financing: Analysis Using Financial Data

A company is evaluating its financing options and is considering both equity financing (issuing stoc

Exchange Rates, Net Exports, and Capital Flows in the Foreign Exchange Market

Understanding the foreign exchange market is crucial for assessing trade and financial flows. Analyz

Exploring the Relationship between Monetary Base and Money Supply

The monetary base and the money supply are closely linked through the banking system. Analyze the fo

Financial Assets and the Risk-Return Tradeoff

This question examines the risk-return tradeoff in financial investments. Answer the following parts

Foreign Demand and the Loanable Funds Market

Investigate how foreign demand for domestic assets influences the loanable funds market. Answer the

Foreign Investment and Its Impact on the Loanable Funds Market

Foreign investment can significantly influence domestic financial markets. Answer the following: (i

Fractional Reserve Banking and T-Account Analysis

This question examines the process of money creation in a fractional reserve banking system using T-

Fractional Reserve Banking and the Money Multiplier

Fractional reserve banking allows banks to hold only a fraction of deposits as reserves and to loan

Fractional Reserve Banking and the Money Multiplier

This question addresses the principles of fractional reserve banking and the concept of the money mu

Fractional Reserve Banking and the Money Multiplier

This question examines the workings of fractional reserve banking and the concept of the money multi

FRQ 3: Bond Prices and Interest Rates

Explain the inverse relationship between bond prices and interest rates, and analyze the impact of i

FRQ 4: Real vs Nominal Interest Rates Calculation

Utilize given scenarios to compute real interest rates and analyze their implications for economic a

FRQ 10: Impact of Discount Rate and Reserve Ratio on Banking

Analyze how changes in the discount rate and the required reserve ratio affect bank reserves and the

FRQ 14: Risk and Return in Financial Assets

Analyze how risk and liquidity influence the rate of return of financial assets.

Graphical Representation of the Money Market

This question requires you to graphically represent the money market and analyze the impact of a dec

Inflation and Its Impact on Investment Decisions

Analyze how inflation affects real interest rates and, in turn, investment decisions within an econo

Liquidity in Financial Markets During Economic Crises

Liquidity is a critical factor during economic downturns. Answer the following: (i) Define liquidit

Measurement of the Money Supply

Examine the definitions of M1 and M2 and discuss why the money supply is considered fixed at a given

Measuring Money Supply: M1 vs M2

This question focuses on the measurement of the money supply using definitions of M1 and M2 along wi

Monetary Multiplier and Money Creation

This question assesses your understanding of fractional reserve banking and the money multiplier eff

Monetary Policy and Aggregate Demand: Short-Run Effects

This question analyzes how expansionary monetary policy influences aggregate demand and short-run ma

Monetary Policy Challenges in a Liquidity Trap

Critically assess the effectiveness of monetary policy when the economy is in a liquidity trap. Answ

Money Market Equilibrium and Monetary Policy Impacts

Monetary policy operations affect the money market significantly. Use the following scenario to anal

Money Market Equilibrium and Monetary Policy Tools

Analyze the money market, diagram its equilibrium, and discuss the effects of open market operations

Money Market Equilibrium in a Changing Economy

This question examines the concept of money market equilibrium and the effects of changes in nominal

Open Market Operations and the Money Supply

Open market operations (OMOs) are a primary tool used by the Federal Reserve to manage the money sup

Open Market Operations and Their Impact

Discuss the role of open market operations (OMOs) in monetary policy and analyze their effects on th

Open Market Operations: Case Study of a Central Bank Policy

This question examines how open market operations (OMOs) are implemented by the central bank and the

Risk, Return, and Bond Prices

This question focuses on how risk affects the rate of return and bond pricing in financial markets.

The Discount Rate and Its Economic Impact

Examine the role of the discount rate as a monetary policy tool and its broader economic implication

The Role of Money Supply in Monetary Policy

This question evaluates your understanding of how the Federal Reserve uses monetary policy, particul

Aggregate Production Function and Long-run Growth

The aggregate production function relates inputs like capital and labor to total output. Examine how

Analyzing the Wage-Price Spiral

An economy is experiencing a wage-price spiral where rising wages lead to higher production costs, w

Application of the Quantity Theory of Money

The Quantity Theory of Money asserts that changes in the money supply have a direct impact on the pr

Balancing Fiscal and Monetary Policies: Coordination Challenges

An economy is facing an inflationary gap. The government implements contractionary fiscal policy whi

Comparing Price Index Measures: GDP Deflator vs CPI

Using provided data, compute the GDP deflator and the Consumer Price Index (CPI), and compare the ad

Computational Analysis using the Equation of Exchange

Using the equation of exchange, compute the effects of changes in the money supply on the price leve

Coordinated Fiscal and Monetary Policies for Full Employment

Achieving full employment often requires a coordinated effort between fiscal and monetary policies.

Cost-Push Inflation: Analyzing Supply Shocks

A significant increase in oil prices raises production costs, resulting in a supply shock that shift

Crowding Out Effect and Long-run Fiscal Implications

A government increases its spending during an economic downturn, leading to a higher budget deficit.

Crowding Out Effect in the Loanable Funds Market

Analyze the crowding out effect that may occur when the government increases its borrowing to financ

Deflation Dynamics and Policy Exit Strategies

Deflation can be as damaging as inflation, requiring prompt policy responses. In this question, you

Demand-Pull vs. Cost-Push Inflation

Inflation can occur due to different economic forces. Compare and contrast demand-pull inflation wit

Demand-Pull vs. Cost-Push Inflation Analysis

Differentiate between demand-pull inflation and cost-push inflation and examine how each affects the

Economic Growth: Production Possibilities and Aggregate Production Function

Discuss the determinants of long-run economic growth and illustrate how an economy's production poss

Effects of Expansionary Monetary Policy in the Money Market

Consider an economy where the central bank decides to increase the money supply. In this scenario, t

Fiscal Deficit, National Debt, and Long-Run Growth

Examine the long-run implications of persistent fiscal deficits and a high national debt on economic

Fiscal Deficits, Borrowing, and the Crowding Out Effect

The government runs a significant budget deficit and finances it by borrowing funds in the loanable

Fiscal Policy Coordination and Its Trade-offs

This question explores the coordination of fiscal and monetary policies and the trade-offs involved.

FRQ 1: Loanable Funds Market – Government Borrowing Impact

Analyze how an increase in government borrowing affects the loanable funds market. In your response,

FRQ 2: Adjustment from Inflationary Gap: AD-AS Analysis

Examine the adjustment process in an inflationary gap scenario. Explain how an increase in aggregate

FRQ 5: Monetary Neutrality and the Quantity Theory of Money

Discuss the concept of monetary neutrality using the quantity theory of money. Answer the following

FRQ 9: Supply-Side Policies and Long-Run Aggregate Supply

Discuss the impact of supply-side policies on long-run economic growth. Use an AD-AS framework to ex

FRQ 11: Investment Tax Credits and Their Impact on AS and AD

Analyze the role of investment tax credits as a supply-side policy tool and their impact on aggregat

FRQ 12: Fiscal Stimulus in a Deep Recessionary Gap

Assess how expansionary fiscal policy can be used to close a deep recessionary gap and examine the r

FRQ 14: Policy Coordination in a Changing Economic Environment

Analyze how fiscal and monetary policies can be coordinated to achieve both full employment and stab

FRQ 15: Long-Run Phillips Curve and the Natural Rate of Unemployment

Using the Phillips curve framework, explain why the long-run Phillips curve is vertical and discuss

FRQ 19: The Relationship Between Money Supply Changes and Inflation

Using the Quantity Theory of Money, analyze how an increase in the money supply can lead to inflatio

FRQ 20: Coordination of Fiscal and Monetary Policy in an Inflationary Gap

Discuss how fiscal and monetary policies can be coordinated to address an inflationary gap, and anal

Government Budget Deficits and Long-Run Price Level Impacts

Persistent government budget deficits can have long-run effects on the economy. In this question, yo

Graphical Analysis of Demand-Pull Inflation

Illustrate and explain the process of demand-pull inflation using an AD-AS framework.

Impact of Infrastructure Spending on LRAS

Government spending on infrastructure is considered vital for long-run economic growth. Analyze the

Impact of Public Infrastructure Spending on Long-Run Economic Growth

Evaluate how government spending on infrastructure can influence long-run economic growth. Consider

Inflation Expectations and Policy Effectiveness

Inflation expectations play a critical role in determining the actual inflation rate and the effecti

Inflationary Gap and Its Implications

An economy operating near full employment experiences a surge in aggregate demand, creating an infla

Monetary Policy in Recessionary Gap Correction

This question addresses the role of monetary policy in correcting a recessionary gap. When an econom

Monetary Policy, Money Supply and Inflation: Quantity Theory of Money Calculation

Using the Quantity Theory of Money, analyze the impact of an increase in the money supply on the pri

Money Growth and the Quantity Theory of Money

This question challenges you to explore the relationship between money supply, nominal GDP, and the

Phillips Curve Analysis with Shifting Inflation Expectations

Analyze the relationship between unemployment and inflation using the Phillips curve, considering ch

Phillips Curve and the Trade-Off Between Inflation and Unemployment

Examine the relationship between inflation and unemployment as illustrated by the Phillips curve. Yo

Public Policy Initiatives to Foster Economic Growth

Public policy can drive both short-run aggregate demand and long-run growth. Consider the following:

Recessionary Gap and Long‐Run Adjustment

In an economy initially operating at full employment, a loss of consumer and firm confidence causes

Recessionary Gap and Self-Correction Adjustment

Use the AD-AS model to analyze a situation in which an economy experiences a recessionary gap due to

Recessionary Gap Due to Decline in Consumer Confidence

An economy is initially at full employment with an equilibrium level of real GDP at GDP_f and a pric

Supply-Side Fiscal Policy and Long-Run Economic Growth

Evaluate how supply-side fiscal policy, such as reducing income taxes, can enhance long-run economic

Technological Change and the Aggregate Production Function

This question focuses on the aggregate production function and the role of technological change in d

The Role of the Velocity of Money in Inflation

Using the quantity theory of money, analyze the effect of an increase in the money supply on the pri

Analyzing Balance of Payments Data

A country provides the following data for the year: • Goods and Services: Exports = $500 billion, I

Assessing the Impact of Demographic Changes on International Trade

This FRQ asks you to explore the impact of shifting consumer tastes, possibly driven by demographic

Balance of Payments Accounts Analysis

This question assesses your understanding of the components of the balance-of-payments statement. In

Balance of Payments Statement Calculation

This question analyzes the components of the balance of payments. Use the provided table to answer t

Capital Flows and Interest Rate Differentials

Investigate how differences in real interest rates affect international capital flows and exchange r

Capital Flows and Net Exports

A country’s net exports are influenced by its capital flows. Analyze how inbound and outbound capita

Case Study: U.S. Monetary Policy and the Dollar

In a scenario where the Federal Reserve adopts an expansionary monetary policy, examine the subseque

Comparing Economic Effects: Tariffs vs. Quotas on Imports

Compare the economic implications of a tariff and a quota on imported cars using the case provided.

Comparing Quotas and Tariffs in Domestic Markets

Evaluate the impact of import quotas versus protective tariffs on domestic markets.

Currency Appreciation and Net Exports

Explore the relationship between currency appreciation and net exports. Address the following parts:

Determinants of Exchange Rate Shifts: A Comprehensive Analysis

Refer to the graph labeled 'Foreign Exchange Market for U.S. Dollar' provided below. Identify and ex

Domestic Interest Rates and Currency Supply

Analyze the relationship between domestic interest rates and the supply of the domestic currency in

Effects of Monetary Policy on Capital Flows

Investigate the relationship between domestic interest rate changes and international capital flows

Exchange Rate Determination in Currency Markets

Examine the fundamentals of exchange rate determination in international markets. Answer the parts t

Fed Intervention in Balance-of-Payments Adjustment

Analyze the role of the Federal Reserve in intervening in the foreign exchange market to correct bal

Fiscal Policy and Exchange Rate Movements

Evaluate how expansionary fiscal policy can affect both the exchange rate and aggregate demand. Use

Fiscal Policy Effects on Currency Exchange Rates

Analyze the impact of expansionary fiscal policy on a country's exchange rate.

Fiscal Policy's Effect on Aggregate Demand and Exchange Rates

Discuss the impact of expansionary fiscal policy on aggregate demand, national income, and the excha

Floating Exchange Rates and Domestic Economic Policy

Discuss the advantages and disadvantages of a floating exchange rate system with respect to domestic

Foreign Currency Demand Shifts: Causes and Consequences

Foreign currency demand can shift for several reasons. Evaluate the determinants behind these shifts

Foreign Exchange Market Equilibrium and Money Supply Shifts

Examine the impact of monetary policy changes on the foreign exchange market.

Foreign Exchange Market Shifts: A Multi-step Analysis

A recent increase in foreign consumer tastes for U.S. exports, coupled with rising incomes abroad, h

FRQ 10: Foreign Demand for Domestic Assets and Exchange Rate Movements

Foreign investors increasingly seek domestic assets. In this question, you will analyze how an incre

FRQ 18: Supply and Demand Shifts in the Foreign Exchange Market

This question focuses on the simultaneous shifts in the supply and demand for a currency in the FX m

Impact of Protective Tariffs on Domestic Markets

Evaluate the economic impact of imposing a protective tariff. Your answer should address the followi

Impact of Rising Relative Incomes on Exchange Rates

The table below shows changes in income levels and corresponding changes in the value of various cur

Impact of Tariffs on Domestic Markets and Exchange Rates

Examine the effects of a protective tariff on the domestic steel market and on the current account.

Official Reserves and Balance of Payments Adjustments

The nation’s balance of payments must balance to zero. This is achieved in part by the official rese

Tariff Impacts on Domestic Markets

A protective tariff is imposed on imported steel. The following graph displays the domestic supply a

Tariffs and Quotas: Domestic and International Impacts

This FRQ examines the effects of trade policies on domestic markets and international trade flows by

The Role of Official Reserves in Balancing the BOP

Examine how official reserves are used by the central bank to balance the payments in the balance of