Main content
Course: AP®︎/College Macroeconomics > Unit 8
Lesson 1: Prepare for the 2020 AP Macro ExamSubmit your questions about the 2020 AP Macroeconomics exam
Get your questions about the AP exam answered
The videos, articles, and practice questions in this course are designed to prepare you for success on your exams.
If you have specific questions about the exam that are not already covered in our lessons, you can post them in the comments section of this article.
Our content creators will be answering questions in the comments section below starting on April 20th and up to the week of the exam.
Step 1: Add your question
You can add your question in the comments section at the bottom of this article.
(You may need to click "go to the lesson page" to see the comments section on the article, depending on which device you are viewing from)
Step 2: Upvote questions from others
You can upvote questions that you'd also like to see answered.
Step 3: Check back for answers and more content
Between now and the week before the 2018 exam, our content creators at Khan Academy will be answering questions in the comment section. We'll also be making additional articles or videos that will directly answer some of the questions below.
In the meantime, practice with our exercises, quizzes, and unit tests.
Want to join the conversation?
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.
An economy is currently in a recession.
(a) Draw a single correctly labeled graph with both the short-run and long-run Phillips curves. Label the current short-run equilibrium as point X.
(b) Is the expected inflation rate greater than, less than, or equal to the actual inflation rate?
(c) Will borrowers on fixed-rate loans benefit from the situation that you identified in part (b)? Explain.
(d) Assume the government budget is balanced. In the absence of any discretionary policy action, will the government budget move into surplus, deficit, or remain in balance? Explain.
(e) On your graph in part (a), show how the economy will adjust in the long run in the absence of any discretionary policy action.
(f) Now assume instead the government increases spending without changing taxes to close the recessionary gap. What effect will this policy have on the national debt?
(g) Draw a correctly labeled graph of the loanable funds market and show the effect of the change in the national debt on the equilibrium real interest rate.
(h) Based on the change in the equilibrium real interest rate identified in part (g), what will happen to economic growth in the country in the long run? Explain.(15 votes)
What is the differencebetween microeconomice and macroeconomics?(3 votes)
From the author:GymVidhya has it pretty much correct. More formally, Microeconomics is the study of individual decisionmakers (individuals, households, and firms); Macroeconomics is the study of entire economies.
Examples of microeconomics questions are
-How much should a firm produce to maximize their profit?
-What are the welfare implications of a tax on a market?
-How do individuals behave in strategic interactions?
Examples of Macroeconomic questions are:
-How much did the nation of Hamsterville produce this year?
-Why does unemployment exist?
-How are real interest rates determined.
Hope that helps!(5 votes)
If I don't have that much time to study for this test since I have other AP exams to study for, would it be a better use of my time to learn the one topic we did not cover in class (labor markets) or refine what I have already learned?(4 votes)- That's a tough one! According to the AP Microeconomics course description (https://secure-media.collegeboard.org/digitalServices/pdf/ap/ap-economics-course-description.pdf), as much as 18% of the exam might be on factor markets (like the market for labor). It might be risky to skip over something that might weight that heavily in the makeup of the exam.(3 votes)
Hello, I have 10 free periods to study for the AP macroeconomics test in any way I please after my course ends. Are there any specific resources or study tips that I can use?(1 vote)- That's a great question!
The "right" answer really depends on what you feel weakest in and your learning style, but practice, practice, practice is a good approach. Here are some ways to practice:
1) Every AP Macroeconomics lesson on Khan Academy has an exercise with practice questions.
2) Practice free response questions (FRQ) - the College Board has released FRQ from previous years' exams. They also provide solutions and sample answers that were submitted by actual students. You can i) practice doing those free response questions and then check your work using the rubric, and ii) Look at the sample student responses to grade them based on the rubric. This second task will help you really understand some of the mistakes that were commonly made that year.
Good luck!(7 votes)
- Aren't the 2020 AP Macroeconomics Exams 45 minutes online?(3 votes)
- they are and will be some form of FRQ look on the college boards website for more information.(2 votes)
- What is the new format of the AP exam with COVID?(2 votes)
- What is the relationship between government spending, interest rates, net exports, and value of currency in a foreign exchange market. Also how to draw the supply and demand graphs for currency/what does shifting of supply and demand mean for a currency. (I assume if demand for a currency is up it will appreciate and if demand is down the opposite, if supply goes up it will depreciate and vice versa.)(2 votes)
I know that bonds are forms of IOU's but how do they work? If the government is selling bonds, and banks buy them, do they owe the government money? I don't understand the concept of bonds :/(1 vote)- From the author:This is a VERY simplified example, but hopefully, it will clarify some of the basic ideas behind what a bond is, how it works, and how open market operations impact the money supply.
Suppose the nation of Hamsterville needs to finance some debt. For example, let's say it has a budget deficit of $100 dollars. Hamsterville's treasury department issues a one year bond worth $110 that matures in 1 year, and a guy named Stan buys the bond for $100.
The government now owes Stan the face value of the bond ($110). Stan has effectively loaned the government money when he bought the bond.
A couple of weeks later the Central Bank of Hamsterville decides they want to lower the interest rate. They say to Stan, "Hey! Can we buy that bond from you? We'll pay you $101!"
Stan is an impatient guy, so he agrees to this so he doesn't have to wait a whole year to earn any money. The bank pays Stan $101, and by doing so the money supply has increased by $101.
Now, the central bank is the holder of the bond. The government still owes $110 to whoever owns that bond. If the bank still has the bond in a year, the government of Hamsterville will pay the central bank the face value of the bond. Or, if the central bank decides to sell the bond, the government will pay whoever bought that bond the face value.
A bond is basically a loan. It sounds weird to buy and sell a loan, but that is what is basically happening.
I hope that helps!(2 votes)
- will I have a certificate for taking AP Macro Exam?
I am an economics department undergraduate student(1 vote) 
How would economic growth work in the format of long run self adjustment? If AS shifted far right would AD only shift left but by a less extreme amount to indicate long run growth?(1 vote)