2001, Question 1 · 10 points
Government spending versus a corporate tax cut
Graph the short-run effect of more government spending on output and prices and explain what happens to interest rates and investment. Then graph and explain how a cut in corporate profits taxes affects aggregate demand, long-run supply, output and prices, and show its effect on a production possibilities curve.
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 2001 exam. It starts on page 2 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 2) What the exam readers saw (Student Performance Q&A)
Question, scoring guidelines and Chief Reader report: College Board, from the Internet Archive. The title, summary are ours.