AP Macroeconomics FRQ Room

Analyzing Demand Curve Shifts with Price Elasticity

This question examines the differences between movements along a demand curve and shifts in the dema

Comparative Advantage and Trade Opportunities

Analyze trade between two countries and determine how specialization can lead to mutual gains.

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

Determining Demand Changes Using the INSECT Determinants

This question tests your understanding of the determinants of demand using the INSECT acronym (Incom

Distinguishing Macro and Microeconomic Perspectives

This question contrasts macroeconomics with microeconomics. Provide clear explanations and examples.

Economic Growth vs. Contraction Analysis

This question explores the concepts of economic growth and contraction and their manifestations in e

FRQ 5: Determinants of Demand – Impact on Market Equilibrium

Evaluate how changes in various determinants of demand affect market equilibrium using a hypothetica

FRQ 13: Economic Contraction and Production Possibility Analysis

Explore the effects of an economic contraction on a nation’s production capabilities using a Product

FRQ 14: Consumer Preferences and Market Equilibrium

Assess how changes in consumer tastes affect demand and market equilibrium, using graphical analysis

FRQ 18: Evaluating Efficiency and Economic Growth through the PPC

Using the provided PPC graph, examine issues of productive and allocative efficiency, and analyze sh

FRQ 19: Resource Allocation Trade-offs During a Recession

Examine how scarce resources force governments to make difficult trade-offs during a recession, cons

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

Government Policies and Market Equilibrium

This question examines how government policies, such as taxes, affect market equilibrium and overall

Government Taxation and Market Outcomes

Examine the effects of a per-unit tax on a competitive market through both a diagrammatic and analyt

Government Trade-offs: Allocative vs. Productive Efficiency

Facing limited resources, a government must decide between allocating funds to healthcare or infrast

Impact of Technological Advancements on Production

Examine the impact of technological innovations on production capabilities and economic output.

Inflation and the Phillips Curve

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

International Trade and Exchange Rates

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

Loanable Funds Market Impact

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

Macroeconomic Indicators and Policy Responses

This question focuses on key macroeconomic indicators and the policy responses to an overheating eco

Market Equilibrium and Price Determination

This question examines your understanding of market equilibrium and your ability to determine the eq

Market Failure and Efficiency

This question addresses different forms of efficiency and how market failures can disrupt an optimal

Micro vs. Macroeconomic Analysis: Policy Impacts

Differentiate between microeconomic and macroeconomic perspectives and examine how policy changes su

Opportunity Cost in Production Decisions for Firms

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

Opportunity Costs in Personal Financial Decisions

This question examines how individuals make decisions based on opportunity costs, particularly in th

Price Ceiling Impacts in the Housing Market

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

Production Possibilities Curve and Economic Growth

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

Real-life Trade-Offs and Resource Allocation

This question asks you to consider the real-world implications of trade-offs and resource allocation

Taxation and Supply Response

Evaluate the impact of an increase in production taxes on a market's equilibrium using supply and de

Technological Advancements and Efficiency

This question explores the impact of technological progress on productive and allocative efficiency

Assessing the Shadow Economy

Critically evaluate the concept of the shadow economy. Discuss why activities in the shadow economy

Business Cycle Phases and Policy Implications

Analyze the phases of the business cycle and propose appropriate economic policies for each phase. U

Calculating the Unemployment Rate

Compute the unemployment rate using provided labor force data and discuss one aspect of frictional u

Circular Flow and GDP Analysis

Examine the circular flow model in a closed economy and the calculation of GDP using the expenditure

Circular Flow and GDP in a Closed Economy

In a closed economy (with no foreign sector), economic activity can be represented through the circu

Circular Flow Model and GDP Calculation

This question asks you to analyze the circular flow model and calculate GDP using the expenditure ap

Comparing Business Cycle Theories and Policies

Different theories exist to explain fluctuations in the business cycle. Answer the following questio

Comparing GDP Deflator and CPI

Both the GDP deflator and the Consumer Price Index are used to measure price changes in an economy.

Comparing Nominal and Real GDP

Consider an economy where the nominal GDP for a given year is reported along with a price index. Ans

Comprehensive Business Cycle Analysis

Analyze a complex business cycle graph and propose policy recommendations based on cyclical changes.

Costs of Inflation: Menu and Shoe-Leather Costs

This question examines the microeconomic costs associated with inflation, specifically focusing on m

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 and Quality Adjustments

Discuss the challenges the Consumer Price Index (CPI) faces in accurately measuring inflation, parti

Cyclical Unemployment and Policy Intervention

In a cyclical downturn, unemployment rises significantly. Suppose in an economy, the natural rate of

Differentiating Types of Unemployment

Examine different forms of unemployment and illustrate how they manifest in the economy.

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 Aggregate Income vs. Aggregate Spending

Critically analyze the relationship between aggregate income and aggregate spending in GDP measureme

Fiscal Policy and Economic Output

Examine the impact of an expansionary fiscal policy in closing a recessionary gap. Describe the poli

Fiscal Policy and Real GDP: A Multiplier Analysis

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

Fiscal Policy Impact on GDP Components

Consider an economy where the government increases its spending by $100 billion. Using the expenditu

GDP Deflator and Inflation Adjustment

Economists use different price indices to measure inflation. Answer the following: Part A: A table

GDP Deflator and Price Level Analysis

Apply the GDP deflator in calculating real GDP and discuss its advantages over the CPI as a measure

Implications of Price Indices on Social Welfare

Price indices such as the CPI play a crucial role in social welfare, especially in the context of wa

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 Targeting and Monetary Policy

This question requires you to discuss how central banks use inflation targeting as part of their mon

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 Future Economic Growth

Investment spending is a crucial component of GDP that influences future economic growth. Answer the

Labor Force Participation Analysis

Examine how labor force participation is measured and the effects that discouraged workers can have

Labor Force Participation and Economic Analysis

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

Loanable Funds Market and Interest Rate Determination

Analyze the effects of increased government borrowing on the loanable funds market and the resulting

Loanable Funds Market and Saving Behaviors

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

Measuring Unemployment and the Effects of Discouraged Workers

This question addresses the measurement of the unemployment rate, the role of discouraged workers, a

Measuring Unemployment Rates and Phillips Curve Analysis

Analyze unemployment measurement and the implications for macroeconomic policy. Calculate the unempl

Net Exports and Their Role in GDP

Evaluate the role of net exports in the GDP calculation and discuss how changes in net exports refle

Nominal vs. Real GDP Analysis

This question explores the differences between nominal and real GDP and asks for adjustments related

Real Income and Purchasing Power Analysis

This question examines the difference between nominal and real income and how adjustments using the

Real Income vs Nominal Income Adjustments

Inflation can distort the interpretation of income figures. Answer the following: Part A: Refer to

Real vs. Nominal GDP

Compare and contrast nominal GDP and real GDP. Calculate real GDP from given data and discuss the im

Shadow Economy and GDP Underestimation

Evaluate how the presence of a shadow economy can lead to an underestimation of GDP and discuss pote

Unemployment Measurement and Calculation

Using provided employment data, calculate the official unemployment rate and discuss potential pitfa

Unemployment Rate and Labor Force Participation Analysis

Given the following data for a country: total population (16 years and older) is 200 million, employ

Comprehensive Analysis of AD-AS Equilibrium, Fiscal Policy, and Multipliers

This comprehensive question integrates multiple macroeconomic concepts including aggregate demand (A

Credit Crunch and AD Analysis

A sudden tightening in credit markets, commonly known as a credit crunch, affects borrowing and spen

Discretionary Fiscal Policy and Its Lags

Discretionary fiscal policy often suffers from implementation lags. Evaluate how these lags can affe

Discretionary vs. Non-Discretionary Fiscal Policies

Analyze the differences between discretionary and non-discretionary fiscal policies. Discuss their r

Effects of a Positive Technological Shock on the Economy

A sudden technological breakthrough increases productivity across multiple industries. Analyze how t

Exchange Rates and Net Exports Influence on AD

Analyze how fluctuations in exchange rates impact the net exports component of aggregate demand and

Expansionary Fiscal Policy and Aggregate Demand

In this question, you will analyze how expansionary fiscal policy influences aggregate demand and ul

Fiscal Policy Multiplier and Its Limitations

Discuss the concept of the fiscal (spending) multiplier, calculate its value, and analyze why the ac

Fiscal Policy: Contractionary Measures to Control Inflation

This question addresses how contractionary fiscal policies are used to cool down an economy experien

Fiscal Stimulus and Unintended Consequences in an Overheated Economy

Debate the potential unintended consequences of implementing expansionary fiscal policy in an econom

Foreign Sector Effects on Aggregate Demand

Analyze how changes in the foreign sector, such as a depreciating domestic currency, affect aggregat

FRQ 1: Aggregate Demand Components and Shifts

Examine the following data on the four components of aggregate demand (C, I, G, X-M) from Q1 to Q2 a

FRQ 2: Components and Shifts of Aggregate Demand

Aggregate demand (AD) is made up of four components that determine the level of real GDP in an econo

FRQ 2: Spending Multiplier Analysis

Analyze the concept of the spending multiplier in the macroeconomy and determine its numerical value

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 8: Automatic Stabilizers and Economic Stability

Examine the role of automatic stabilizers in mitigating economic fluctuations during recessions and

FRQ 9: Supply Shocks and SRAS Adjustments

Discuss the impact of supply shocks on short-run aggregate supply (SRAS) and the resulting macroecon

FRQ 11: Interplay Between Money Market and AD-AS Model

Consider the transmission mechanism from monetary policy to the real economy. Part A: Draw a money

FRQ 12: Wealth Effect and Consumption Patterns

Explore how changes in wealth affect consumer spending and aggregate demand in the macroeconomy.

FRQ 16: Deriving the Spending and Tax Multipliers from Consumer Behavior Data

Using consumer behavior data, derive the spending multiplier and the tax multiplier, and explain the

FRQ 17: Technological Advancements and Shifts in Long-Run Aggregate Supply

Discuss how technological advancements influence the long-run aggregate supply (LRAS) curve and the

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

Graphing the AD-AS Model: Identifying Economic Equilibrium

Construct and analyze an AD-AS diagram to illustrate economic equilibrium. Identify key characterist

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

Inflationary Gap Analysis Using the AD-AS Model

This question requires you to analyze the implications of an inflationary gap using the AD-AS framew

Interest Rate and Wealth Effects in AD

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

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 in the AD-AS Model

In this question, you will explore the long-run self-adjustment process that occurs in an economy ex

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

Output Gap Analysis via the AD-AS Model

An economy has a full-employment output (GDPf) of $2 trillion but is currently producing only $1.8 t

Recessionary and Inflationary Gaps

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

Recessionary Gap in the AD-AS Model

This question examines your ability to use the AD-AS model to describe and analyze a recessionary ga

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 and Demand Adjustments

Using the aggregate demand and aggregate supply (AD-AS) model, assess the impact of increased govern

Short-Run Aggregate Supply Shocks and Economic Outcomes

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

Supply Shocks and Short-Run Aggregate Supply

This question explores the impact of supply shocks on the short-run aggregate supply (SRAS). (a) De

Tax Policy and Tax Multipliers

Investigate the impact of changes in taxation on aggregate demand by exploring the concept of the ta

Analyzing Bank Balance Sheets Using T-Accounts

T-accounts are a fundamental tool for understanding bank balance sheets. Address the following:

Analyzing Financial Assets and Expected Returns

Consider a firm evaluating investment options where it can invest in a physical asset or engage in f

Analyzing Liquidity of Financial Assets

Consider the following table which lists various financial assets along with their liquidity scores,

Bond Prices and Interest Rates

This question examines the inverse relationship between bond prices and interest rates in financial

Bond Prices and Interest Rates

Bond prices and interest rates share an inverse relationship. Using the data provided and your under

Bond Pricing and the Inverse Relationship with Interest Rates

Bond prices and interest rates share an inverse relationship. Answer the following: (i) Explain why

Calculating Real vs. Nominal Interest Rates

Interest rates can be expressed in nominal and real terms. Use the following equations: $$\text{Nomi

Debt Financing vs. Equity Financing for Firms

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

Evaluating Financial Assets: Stocks vs Bonds

A firm is considering raising funds via issuing stocks (equity financing) or bonds (debt financing).

Evaluating the Effects of Contractionary Monetary Policy

This question examines the effects of contractionary monetary policy on the money market and the bro

Evaluating the Measures of Money Supply: M1 vs. M2

M1 and M2 are two key measures of the money supply. Answer the following questions based on the defi

Evaluating the Trade-Offs in Financial Investment Risk

This question examines how risk considerations influence investment decisions in the financial marke

Expansionary vs. Contractionary Monetary Policy

Monetary policy can be either expansionary or contractionary depending on economic conditions. In an

Fiscal Policy and the Foreign Exchange Market

Examine how specific fiscal policy actions can influence domestic economic activity and internationa

Fractional Reserve Banking and T-Account Analysis

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

FRQ 1: Evaluating Investment Decisions Based on Expected Rate of Return

Using the provided table of assets, analyze which asset meets the firm's criterion for a physical as

FRQ 2: Comparing Equity and Debt Financing

Discuss the differences between equity financing and debt financing, and analyze how firms decide be

FRQ 3: Bond Prices and Interest Rates

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

FRQ 9: Expansionary Monetary Policy via Open Market Operations

Evaluate the impact of an open market purchase on the money supply and interest rates.

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 13: Comparative Analysis of Debt vs. Equity Financing

Compare debt financing and equity financing, and analyze which method may be more advantageous under

FRQ 14: Risk and Return in Financial Assets

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

FRQ 19: Monetary Policy and Aggregate Demand

Examine the transmission mechanism of expansionary monetary policy from the Fed’s actions to shifts

Functions and Measures of Money

This question explores the roles of money in the economy and the measurement of the money supply. An

Graphical Representation of the Money Market

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

Impact of Public Cash Holdings on the Money Multiplier

This question examines how increased public preference for holding cash affects the money multiplier

Inflation and Borrowing Costs

This question investigates how inflation influences nominal and real interest rates and the subseque

Inflationary Expectations and Financial Asset Valuation

This question analyzes how inflationary expectations affect the valuation of financial assets and th

Liquidity and Investment Decisions

This question explores the concept of liquidity and its influence on investment choices.

Liquidity Preferences and Money Demand

This question examines the different components of money demand and how liquidity preferences affect

Loanable Funds Market Analysis

Explain how government deficit spending affects the loanable funds market and the determination of r

Loanable Funds Market Analysis

This question analyzes the demand and supply factors in the loanable funds market and how shifts in

Loanable Funds Market and Government Borrowing Impact

This question focuses on the impact of government borrowing on the loanable funds market. Consider a

Loanable Funds Market and Government Deficit Spending

This question explores how an increase in government deficit spending affects the loanable funds mar

Monetary Multiplier and Money Creation

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

Monetary Policy in a Changing Economy

This question requires a comprehensive analysis of expansionary monetary policy actions and their ef

Monetary Policy Transmission Through the AD-AS Model

Examine the effects of expansionary monetary policy on the economy using the AD-AS framework, includ

Money Creation through Bank Lending Process

Explain how money is created in a fractional reserve banking system through the process of bank lend

Money Market Equilibrium and Inflation

This question focuses on the interaction between money market equilibrium and changes in the price l

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 Effects

This question investigates how open market operations (OMOs) influence bank reserves, the money supp

Open Market Operations and Their Impact

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

Predicting Consumer Borrowing Based on Interest Rate Changes

Consumer borrowing decisions are influenced by nominal interest rates and expectations about future

Required Reserve Ratio and the Money Multiplier

This question explores the impact of changes in the required reserve ratio on the money multiplier a

Risk and Return Trade-offs in Financial Investments

Investors must balance risk and potential returns when choosing between different financial assets.

Risk, Liquidity, and Bond Prices

Explore the relationship between bond prices, interest rates, risk, and liquidity.

The Loanable Funds Market and Economic Growth

This question explores the role of the loanable funds market in facilitating economic growth.

Aggregate Price Measures and Inflation Calculation

This question assesses your ability to compute and interpret nominal GDP, the GDP deflator, and the

Analysis of the Phillips Curve in a Recessionary Environment

An economy is in a recession with rising unemployment and falling inflation. Data indicates a moveme

Analyzing Budget Deficits, Surpluses, and National Debt

Examine the concepts of budget deficits and surpluses, and analyze their relationship with the natio

Analyzing Double Shocks: Recession and Inflation Simultaneously

An economy is hit by two simultaneous shocks: a decline in aggregate demand due to reduced consumer

Analyzing Stagflation and Policy Responses

Stagflation is a period when inflation and unemployment rise simultaneously. This situation poses a

Analyzing the Wage-Price Spiral

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

Budget Deficits, National Debt, and Crowding Out

This question examines the impacts of fiscal deficits and national debt on the economy, particularly

Budget Deficits, National Debt, and Long-Run Output

Analyze the implications of persistent budget deficits on a nation’s long-run output and potential i

Crowding Out Effect Analysis in the Loanable Funds Market

Government borrowing to finance budget deficits can lead to a crowding out of private investment. In

Crowding Out Effect and Long-run Fiscal Implications

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

Demand-Pull vs. Cost-Push Inflation Analysis

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

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

Expansionary Fiscal Policy and AD-AS Analysis

An economy operating below full employment (with a recessionary gap) experiences expansionary fiscal

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 Expansion and Crowding Out in the Loanable Funds Market

Examine the crowding out effect in the context of expansionary fiscal policy and its impact on the l

Fiscal Policy and Long-Run Economic Growth

Fiscal policy not only affects short-run stabilization but can also influence long-run economic grow

Fiscal Stimulus and the Multiplier Effect

Fiscal stimulus is often used to counteract a recessionary gap. In this question, you will analyze t

FRQ 6: Supply-Side Fiscal Policy and Long-Run Economic Growth

Evaluate how supply-side fiscal policies promote long-run economic growth by shifting the long-run a

FRQ 7: Public Debt, Budget Deficits, and Crowding Out

Discuss the implications of budget deficits and public debt on the economy, focusing on the mechanis

FRQ 8: Stagflation – Causes and Policy Dilemmas

Analyze stagflation by discussing its causes and the policy dilemmas it presents.

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 9: Wage-Price Spiral and Double Shifts

Examine the concept of the wage-price spiral and how double shifts in aggregate demand (AD) and shor

FRQ 12: Stagflation: Causes, Effects, and Policy Challenges

Stagflation is a challenging economic condition characterized by stagnant growth and high inflation.

FRQ 16: Demand-Pull Inflation Correction Policies

Discuss the correction policies used to address demand-pull inflation and analyze their short-run an

FRQ 17: Risk Behavior, Interest Rates, and Investment Incentives

Discuss how changes in tax policy can influence risk-taking and investment incentives. Analyze the p

FRQ 18: Fiscal Stimulus and Its Impact on National Output and Employment

Evaluate the effects of fiscal stimulus on national output and employment. Use the multiplier concep

FRQ 19: Public Policy and Infrastructure Spending – Effects on AD and LRAS

Examine how government spending on infrastructure can affect both aggregate demand and long-run aggr

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

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

Government Infrastructure Spending and Long-Run Economic Growth

Infrastructure spending is believed to have significant effects on long-run economic growth. Analyze

Government Spending Multipliers and GDP Impact

Evaluate the concept of the government spending multiplier and its effect on overall economic output

Impact of Infrastructure Spending on LRAS

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

Inflation Adjustment Mechanisms in the AD-AS Model

Examine the process by which an inflationary gap is corrected in the economy, and discuss the role o

Investment Tax Credit and Its Effect on Aggregate Supply

Investment tax credits are used to stimulate capital investment and thereby shift the aggregate supp

Investment Tax Credit and Long-Run Economic Growth

Examine how an investment tax credit can affect long-run economic growth through its impact on capit

Monetary Neutrality and Long-Run Supply Response

Economic theory posits that changes in the money supply do not affect real output in the long run (m

Monetary Neutrality and Real GDP

Monetary neutrality suggests that changes in the money supply affect nominal variables but not real

Monetary Policy and Economic Stabilization in Federal Systems

Effective monetary policy is crucial for economic stabilization, particularly when the central bank

National Deficit and Its Long-Run Impact on the Economy

An economy runs persistent budget deficits that are financed by borrowing, resulting in a growing na

Phillips Curve and the Trade-Off Between Inflation and Unemployment

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

Phillips Curve: Trade-offs and Long-run Neutrality

The Phillips curve illustrates the trade-off between inflation and unemployment in the short run but

Policy Coordination: Balancing Fiscal and Monetary Policy

Modern economies often face conflicting pressures that require coordination between fiscal and monet

Public Debt, Interest Rates, and Private Investment: Exploring Crowding Out

High levels of public debt can have various impacts on the economy. Answer the following: (a) Descr

Public Policy and the Production Possibilities Curve

Public policy initiatives such as improved education and infrastructure can shift a country’s produc

Public Policy Initiatives to Foster Economic Growth

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

Quantitative Analysis of the Spending Multiplier and Inflation

In an economy with an MPC of 0.7, the government enacts a contractionary fiscal measure that reduces

Quantity Theory of Money and the Effects of Money Supply Changes

Utilize the equation of exchange to analyze the impact of an increase in the money supply on the pri

Recession and Deflation: A Detailed Analysis

A significant decline in aggregate demand can lead to both a recession and deflation. Analyze such a

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

Short-Run Policy Effects on Long-Run Inflation and Output

Stabilization policies often have different effects in the short run versus the long run. In this qu

Supply-Side Fiscal Policies and Economic Growth

This question examines how supply-side fiscal policies, such as tax incentives and investment credit

Wage-Price Spiral and Inflation Dynamics

Analyze the wage-price spiral phenomenon and its implications for sustained inflation. Propose poten

Analyzing Short-Run Forex Market Adjustments

Examine a situation in which speculators cause shifts in the forex market. Use the provided graph to

Assessing Current and Financial Account Deficits

Explain the differences between a current account deficit and a financial account surplus, and analy

Capital Account Dynamics in Open Economies

Analyze quarterly trends in the capital account and discuss their implications for the domestic curr

Capital Flows and Net Exports

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

Comparative Analysis of Current and Capital Accounts

Analyze the differences between the current account and the capital account, and explain how transac

Comparative Analysis of Tariffs vs. Quotas: Economic Efficiency

This FRQ asks you to compare the economic impacts of tariffs and quotas, particularly in terms of th

Comparative Fiscal Policy Impacts on Exchange Rates

Evaluate how differences in fiscal policy between regions can impact exchange rates. Your answer sho

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.

Comprehensive Analysis: Policy Shifts and International Economic Equilibrium

This FRQ requires a comprehensive analysis of a complex policy scenario involving simultaneous contr

Currency Appreciation and Depreciation: Causes and Consequences

This FRQ requires you to analyze the factors that determine whether a currency appreciates or deprec

Currency Appreciation and Net Exports

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

Economic Effects of Import Quotas

Using the context of an import quota on automobiles, answer the following parts regarding its impact

Effects of Fiscal Policy on Exchange Rates and Net Exports

Consider an expansionary fiscal policy (i.e., increased government spending or lower taxes) that shi

Evaluating Monetary Policy Impact on Exchange Rates

This FRQ focuses on the transmission mechanism of monetary policy in an open economy. Analyze how co

Exchange Rate Equilibrium Analysis

Referring to the provided foreign exchange market graph, answer the following parts regarding equili

Fiscal Policy Effects on Currency Exchange Rates

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

Foreign Exchange Market Equilibrium Analysis

Consider the foreign exchange market where the U.S. dollar is traded for euros. Using supply and dem

Foreign Exchange Market Equilibrium and Money Supply Shifts

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

FRQ 2: Fiscal Policy Impact on Exchange Rates and Net Exports

This question examines how expansionary fiscal policy influences aggregate demand, net exports, and

FRQ 3: Graphical Analysis of Tariff Impacts on the Steel Market

Tariffs are often used to protect domestic industries, but they can also create market distortions.

FRQ 4: The Role of Speculation in the Forex Market

Speculation in the forex market can create rapid fluctuations in exchange rates. This question focus

FRQ 7: Analysis of Inbound and Outbound Capital Flows

Capital flows are a key component of the international financial system. In this question, you will

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 11: Speculative Behavior in the Foreign Exchange Market

Speculation can play a significant role in the foreign exchange market, often amplifying movements i

FRQ 12: Real Interest Rates and International Capital Flows

Real interest rates are crucial in determining international capital flows. This question requires y

FRQ 13: Impact of Global Economic Shocks on the Forex Market

Global economic shocks can have significant impacts on the foreign exchange market. In this question

FRQ 15: Fiscal vs. Monetary Policy: Effects on Data and Exchange Rates

Contractionary fiscal policy and contractionary monetary policy can have very different impacts on t

FRQ 17: Global Shocks and the U.S. Current Account

Economic shocks in major trading partners can affect the U.S. current account significantly. This qu

FRQ 18: Exchange Rate Adjustments and Official Reserves

Countries often use official reserves to manage imbalances in their balance of payments. This questi

FRQ 20: Dynamic Effects of Shifts in Net Exports on the Domestic Economy

Shifts in net exports have significant dynamic effects on the domestic economy, impacting aggregate

Graphical Representation of Balance of Payments Trends

Analyze the relationship between the current account and the capital account as components of the ba

Impact of Fiscal Policy on Aggregate Demand and Net Exports

This FRQ explores how expansionary fiscal policy affects aggregate demand and subsequently influence

Interest Rates and International Capital Flows: A Detailed Analysis

Domestic interest rate changes significantly influence international capital flows. Assess how an in

Official Reserves and Balance Adjustment

Discuss the role of the official reserves account in the balance-of-payments adjustments. Provide a

Policy Effects on the Exchange Rate: Expansionary vs. Contractionary Approaches

Fiscal and monetary policies both impact the exchange rate. Compare and contrast the effects of expa

Policy Trade-offs in Balancing BOP Deficits and Exchange Rate Stability

Critically evaluate the policy trade-offs that governments face when addressing persistent balance o

Speculation and Its Impact on Currency Markets

This FRQ examines the role of speculation in the foreign exchange market and its effect on currency