Tackle the Test: Free-Response Questions

  1. Question

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    Suppose the U.S. economy is experiencing a recession.

    Rubric for FRQ 1 (12 points)

    image

    1 point: The vertical axis is labeled “Aggregate price level” and the horizontal axis is labeled “Aggregate output” or “Real GDP.”

    1 point: The AD curve slopes downward, the SRAS curve slopes upward, and the LRAS curve is vertical.

    453

    1 point: The equilibrium is found where the SRAS curve crosses the AD curve, and the equilibrium aggregate price level and aggregate output are shown on the axes at this point.

    1 point: The equilibrium is to the left of the LRAS curve.

    1 point: The SRAS curve shifts to the left.

    1 point: The equilibrium aggregate price level and output are shown on the axes at the new equilibrium (increased aggregate price level, decreased aggregate output).

    1 point: It increases unemployment.

    1 point: It increases the aggregate price level (inflation).

    image

    1 point: The vertical axis is labeled “Exchange rate (Canadian dollars per U.S. dollar),” and the horizontal axis is labeled “Quantity of U.S. dollars.” Demand for U.S. dollars slopes downward and is labeled; supply of U.S. dollars slopes upward and is labeled.

    1 point: The equilibrium exchange rate and quantity of U.S. dollars are shown on the axes at the intersection of the demand and supply curves.

    1 point: The demand for U.S. dollars will decrease.

    1 point: The inflation in the United States will lead to a decrease in the demand for U.S. exports (which must be purchased with U.S. dollars).

  2. Question

    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
    Assume the United States is operating below potential output.