2025, Set 1, Question 3 · Short · 5 points · about 12 minutes
2025 AP Macroeconomics FRQ 3 (Set 1) answers
Real GDP and the output gap in Middleland
Compare real and nominal GDP in the base year, compute real GDP for the next year from a price table, graph the gap against potential output, and size the spending change needed with the multiplier.
Skip to the worked answer and scoring (try the question first if you can)
1 Read the question
The question is College Board's, from the 2025, Set 1 exam. It starts on page 5 of the PDF.
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 6) What the exam readers saw (Chief Reader report)
4 Worked answer and scoring
Here is how a response that earns every point could read, part by part, and what each of College Board's scoring points asks for, put in our own words. Open a part once you have written your own answer to it. The scoring guidelines PDF above is the official word on every point.
Part A 1 point
Model answer
Equal. 2021 is the base year, and real GDP is measured in base year prices, so in the base year real GDP and nominal GDP use the same prices and come out the same.
What earns the point
- Equal, because in the base year real and nominal GDP are valued at the same prices. Real GDP removes the effect of price changes since the base year. In the base year itself there has been no change to remove.
Part B 1 point
Model answer
Real GDP in 2022 values the 2022 quantities at 2021 prices:
(50 × $11) + (70 × $4) + (30 × $12) = $550 + $280 + $360 = $1,190
What earns the point
- $1,190, with the work shown. Real GDP for 2022 uses 2022 quantities at base year prices. Using 2022 prices gives nominal GDP, $1,300, instead.
Part C 2 points
Model answer
Real GDP is $1,190 and potential is $1,150, so the economy is producing above full employment. Draw AD sloping down, SRAS sloping up and a vertical LRAS. Label the price level and output where AD meets SRAS as PL1 and Y1. Put LRAS to the left of Y1 and label its output YF.
What earns each point
- A correctly labeled AD and AS graph with PL1 and Y1 where AD meets SRAS. The short-run equilibrium is where AD crosses SRAS, and both values have to be marked on the axes.
- A vertical LRAS to the left of Y1, with YF labeled. Actual output, $1,190, is more than potential, $1,150. Full-employment output is the smaller number, so LRAS sits to the left of where AD and SRAS meet.
Part D 1 point
Model answer
The output gap is $1,150 minus $1,190, which is negative $40. The spending multiplier is 1 / (1 minus 0.8) = 5. The change in government spending is the gap divided by the multiplier: negative $40 / 5 = negative $8. Government spending must decrease by $8.
What earns the point
- A decrease of $8, with the work shown. Divide the gap by the multiplier; multiplying gives $200, which is wrong. And the economy is above potential, so spending has to fall, not rise.
Common mistakes
From what the exam readers reported seeing in 2025 students' answers, in our words:
- In part D, multiplying the output gap by the spending multiplier instead of dividing by it.
- In part D, saying government spending should increase. Output is above potential here, so the gap is closed by spending less.
Question, scoring guidelines and Chief Reader report: College Board. The title, summary and worked answer are ours.