2015, Question 1 · 10 points
Closing a recessionary gap with monetary or fiscal policy
Graph an economy below full employment, pick the federal funds rate move that closes the gap and show it in the money market, compute the spending change needed with an MPC of 0.8 and compare it with the tax change needed, then judge how an income tax cut affects AD and LRAS.
This exam had three free-response questions in a 10 minute planning period plus 50 minutes of writing, with a suggestion to spend about half the time on Question 1 and split 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 2015 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 May 6, 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.