2000, Question 3 · 7 points
A smaller money supply in a closed economy
Graph the money market to show how a cut in the money supply changes interest rates, explain how that interest rate change affects consumption, investment and government spending, and graph the short-run effect on output and the price level.
This exam had three free-response questions with 10 minutes of planning and 50 minutes of writing, and the directions suggested spending about half the time on Question 1 and splitting the rest evenly between Questions 2 and 3. The current exam has 3 free-response questions in 60 minutes. The skills these questions practice still count.
Lessons this question draws on
1 Read the question
The question is College Board's, from the 2000 exam. It starts on page 3 of the PDF. College Board no longer posts this exam, so it opens from the copy of College Board's PDF that the Internet Archive saved on September 28, 2023.
2 Write your answer
Answer each part the way you would on the exam, in full sentences, with your work shown. Your writing saves as you type.
3 Score it
Score your answer against College Board's scoring guidelines, one point at a time. Give yourself a point only when your answer says what the guideline asks for.
Scoring guidelines (PDF, page 3)
Question, scoring guidelines and Chief Reader report: College Board, from the Internet Archive. The title, summary are ours.