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AP Macroeconomics — Practice Questions flashcards

6 of 60 questions free to study here · 6 topics · the whole deck is built into Willys

Multiple-choice practice questions, one best answer each, on GDP, inflation, unemployment, AD–AS, multipliers, banking, monetary and fiscal policy, loanable funds, growth and trade.

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Practice deck · part of AP Macroeconomics · written against: College Board AP Macroeconomics Course and Exam Description (six units). Updated 2026-10-10.

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  1. In one day, a worker in Arland can produce 20 tons of corn or 10 tons of steel, and a worker in Belmor can produce 12 tons of corn or 4 tons of steel. Which statement about specialization is correct?

    A) Neither country gains from trade, since Arland is more productive in both
    B) Arland should produce both goods, since it has the absolute advantage in each
    C) Arland should specialize in corn and Belmor in steel
    D) Arland should specialize in steel and Belmor in corn
    D) Arland should specialize in steel and Belmor in corn

    A ton of steel costs Arland 2 tons of corn but costs Belmor 3, so Arland has the comparative advantage in steel and Belmor in corn. Having the absolute advantage in both goods does not stop both countries gaining from specializing and trading.
    Basic Economic Concepts
  2. Which of the following is counted in the United States' GDP for this year?

    A) The purchase of 100 shares of a technology company's stock
    B) A used textbook a student buys this year from a former classmate
    C) Tuition a student pays this year for college classes
    D) A monthly pension payment the government sends to a veteran
    C) Tuition a student pays this year for college classes

    Tuition pays for a service produced this year, so it counts in consumption. Buying stock is a financial transaction, the used book was counted when it was new, and the pension is a transfer payment.
    Economic Indicators and the Business Cycle › GDP
  3. The marginal propensity to consume is 0.8, and business investment spending falls by 25 billion dollars. What is the maximum change in real GDP?

    A) A decrease of 125 billion dollars
    B) A decrease of 25 billion dollars
    C) A decrease of 20 billion dollars
    D) A decrease of 100 billion dollars
    A) A decrease of 125 billion dollars

    The spending multiplier is 1 ÷ (1 − 0.8) = 5, and 5 × 25 = 125. A fall of 100 billion would use the tax multiplier of 4, which applies to tax changes, not to a direct change in spending.
    National Income and Price Determination › Aggregate Demand and Multipliers
  4. You buy a newly issued bond with a fixed annual interest payment. Soon afterward, market interest rates rise. What happens to the market price of your bond?

    A) It stays the same, because its interest payment is fixed
    B) It falls, because new bonds now offer higher yields
    C) It rises, because bond prices move with interest rates
    D) It rises, because its interest payment increases with rates
    B) It falls, because new bonds now offer higher yields

    Buyers can get higher yields on new bonds, so they will pay less for your bond's fixed payments. Bond prices and interest rates move in opposite directions.
    Financial Sector › Financial Assets and Interest Rates
  5. Consumer spending falls sharply, reducing aggregate demand. How is this shown on the Phillips curve diagram in the short run?

    A) A rightward shift of the short-run Phillips curve
    B) A movement down and to the right along the short-run Phillips curve
    C) A movement up and to the left along the short-run Phillips curve
    D) A leftward shift of the long-run Phillips curve
    B) A movement down and to the right along the short-run Phillips curve

    A fall in AD lowers inflation and raises unemployment, a movement along the SRPC. Shifts of the SRPC come from changes in SRAS or in expected inflation, not from AD.
    Long-Run Consequences of Stabilization Policies › Phillips Curve
  6. A U.S. family on vacation pays a hotel in Italy. Where is this recorded in the U.S. balance of payments?

    A) In the financial account, as a debit
    B) In the financial account, as a credit
    C) In the current account, as a debit
    D) In the current account, as a credit
    C) In the current account, as a debit

    The hotel stay is an import of a service, so it is a debit in the current account. The financial account records purchases and sales of assets, and no asset changed hands here.
    Open Economy › Balance of Payments

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About these cards

Review status: Second-reader reviewed, with corrections applied.

Checked against:

  • Topic outline follows the College Board AP Macroeconomics Course and Exam Description (effective Fall 2026), Units 1–6 (used as an outline only; no text copied).
  • OpenStax Principles of Economics 3e, consulted as a reference; no text copied.
  • Checked against Mankiw, Principles of Macroeconomics (reference only; no text copied). Every numerical answer was recomputed by script.
  • Facts also checked against Federal Reserve Board pages (Reserve Requirements, Interest on Reserve Balances) and the U.S. Bureau of Economic Analysis NIPA Handbook, Chapter 2, and glossary (public domain; reference only; no text copied).

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