WWhat is AP Macroeconomics?
AP Macroeconomics is a high school–level economics course that examines how the overall economy functions. Students study economic output, unemployment, inflation, and long-run growth, alongside the use of fiscal and monetary policy to manage economic fluctuations. A major focus of the AP exam is the ability to apply theory using free response questions (FRQs) that require structured written analysis and correctly labelled diagrams.
This page provides AP Macroeconomics free response questions specifically focused on Gross Domestic Product (GDP), one of the core indicators used to measure economic performance.
Where did we get these AP Macroeconomics free response questions?
The AP Macroeconomics free response questions on this page are drawn from official College Board exams and closely aligned exam-style materials. Each question reflects the wording, structure, and assessment style used in the real AP Macroeconomics exam. By organising questions by topic, students can practise GDP-focused FRQs without needing to search through entire past papers.
For a full list of AP Macroeconomics free response questions across all topics, see the main AP Macroeconomics hub page.
How to use these AP Macroeconomics free response questions
These AP Macroeconomics free response questions on GDP are best used as timed exam practice. Students should begin by identifying the method of GDP measurement being tested, then structure answers using clear definitions, calculations where required, and logical explanations. Many GDP questions also test links between output, employment, and aggregate demand.
For related labour-market questions that connect GDP to unemployment, see AP Macroeconomics free response questions on employment and the workforce.
What is GDP?
Gross Domestic Product (GDP) measures the total monetary value of all final goods and services produced within a country’s borders over a specific period of time. It is the primary indicator used to assess the size, performance, and growth of an economy. In AP Macroeconomics free response questions, GDP is frequently used to evaluate economic cycles, living standards, and policy effectiveness.
GDP can be measured using three equivalent approaches:
- the expenditure approach
- the income approach
- the production approach
Understanding when and how each method is applied is essential for scoring well on GDP-related FRQs.
The components of GDP
Under the expenditure approach, GDP is calculated using four main components:
- Consumption (C): Household spending on goods and services
- Investment (I): Business spending on capital goods, inventories, and residential construction
- Government Spending (G): Expenditure on public goods and services
- Net Exports (X − M): Exports minus imports
AP Macroeconomics free response questions often test students’ ability to identify how changes in these components affect total output. Many of these questions also require analysis using aggregate supply and aggregate demand diagrams.
For additional practice linking GDP to shifts in aggregate demand and output, see AP Macroeconomics free response questions on aggregate supply and demand.
AP Macroeconomics Free Response Questions on GDP
Question 1
The table provided shows economic data for the country of Louland. The base year is year 1, and the GDP deflator in year 2 is 115. Year 1 Year 2 Nominal GDP 800,000 1,035,000 Population 1,000 1,200
(a) Calculate real GDP in Louland in year 2. Show your work. (b) How would the change in real GDP from year 1 to year 2 affect the demand for money and the nominal interest rate in Louland? (c) Did the standard of living of the average citizen in Louland increase, decrease, or remain the same from year 1 to year 2 ? Explain using numbers.
Question 2
The table provided shows the quantity and price of food and clothing, the only two goods produced and consumed in the country of Maltrose, in year 1 and year 2. Assume that year 1 is the base year.
(a) Calculate the nominal GDP in year 2. Show your work. (b) Calculate the GDP deflator in year 2. Show your work.
Question 3
Assume a country’s economy is operating below full employment.
(a) Draw a correctly labeled graph of aggregate demand, short-run aggregate supply, and long-run aggregate supply, and show each of the following. (i) The current equilibrium real output and price level, labeled as Y1 and PL1, respectively (ii) The full-employment output, labeled as YF
(b) Identify one fiscal policy action the country’s government can take to restore full employment.
(c) Assume instead that no fiscal policy action is taken. Suppose a change in investment spending causes real GDP to increase by $ 200 billion. Calculate the minimum change in investment spending that could have caused this increase in real GDP if the marginal propensity to save is 0.25. Show your work.
(d) Assume the output gap was initially $ 800 billion. On your graph in part (a), show the short-run effect of the change in investment spending identified in part (c), labeling the new equilibrium real output as Y2 and the new equilibrium price level as PL2.
(e) Given your answer to part (d), is the actual rate of unemployment greater than, less than, or equal to the natural rate of unemployment? Explain.
(f) Assume that private savings now increase. Draw a correctly labeled graph of the loanable funds market and show the effect of the increase in private savings on the real interest rate.
(g) Based solely on the change in the real interest rate shown in part (f), what will happen to each of the following? (i) Real GDP in the short run. Explain. (ii) Long-run aggregate supply. Explain.
Question 4
The table below shows macroeconomic data for Country A. Year Nominal GDP GDP Deflator Population 2020 40,000 100 100 2021 88,000 200 110
(a) Calculate each of the following for Country A in year 2021. Show your work. (i) Real GDP (ii) Real GDP per capita
(b) Based solely on the data provided, has the standard of living for the average person in Country A increased, decreased, or stayed the same between 2020 and 2021 ? Explain.
(c) How would an increase in government spending on education affect economic growth in Country A? Explain.
(d) Assume that Country A produces consumer goods and capital goods. Draw a correctly labeled production possibilities curve for Country A, and show the effect of the increase in government spending on education on your graph.
Question 5
Assume that the economy of Country X has an actual unemployment rate of 7%, a natural rate of unemployment of 5%, and an inflation rate of 3%.
(a) Using the numerical values given above, draw a correctly labeled graph of the short-run and long-run Phillips curves. Label the current short-run equilibrium as point B. Plot the numerical values above on the graph.
(b) Assume that the government of Country X takes no policy action to reduce unemployment. In the long run, will each of the following shift to the right, shift to the left, or remain the same? (i) Short-run aggregate supply curve. Explain. (ii) Long-run Phillips curve
(c) Identify a fiscal policy action that could be used to reduce the unemployment rate in the short run.
(d) Draw a correctly labeled graph of aggregate demand and short-run aggregate supply, and show the impact on the equilibrium price level and real gross domestic product (GDP) of the fiscal policy action identified in part (c).
(e) Based on the change in real GDP identified in part (d), will the supply of Country X’s currency in the foreign exchange market increase, decrease, or remain the same? Explain.
(f) Based on your answer to part (e) and assuming a flexible exchange rate system, will Country X’s currency appreciate, depreciate, or remain the same in the foreign exchange market?
Question 6
Assume that the United States economy is currently in a short-run equilibrium with the actual unemployment rate above the natural rate of unemployment.
(a) Draw a single correctly labeled graph with both the long-run Phillips curve and short-run Phillips curve. Label the current short-run equilibrium point P.
(b) Assuming no policy actions are taken, will the short-run Phillips curve shift to the right (upward), shift to the left (downward), or remain the same in the long run? Explain.
(c) If the Federal Reserve Bank wants to lower unemployment, what expansionary open-market operation should it use?
(d) How will the open-market operation you identified in part (c) affect each of the following? (i) Federal funds rate. Explain. (ii) Real interest rate in the short run.
(e) Given your answer in part (d)(ii), what is the effect on real gross domestic product (GDP) in the short run? Explain.
(f) Japan and the United States are major trading partners. Indicate how the change in real GDP you identified in part (e) will affect the demand for the Japanese yen in the foreign exchange market.
(g) Draw a correctly labeled graph of the foreign exchange market for the Japanese yen, showing the effect of the change in demand identified in part (f) on the value of the Japanese yen relative to the United States dollar.
Answer Key
Question 2
Question 3
Question 4
Question 5
Question 6
Mark is an A-Level Economics tutor who has been teaching for 6 years. He holds a masters degree with distinction from the London School of Economics and an undergraduate degree from the University of Edinburgh.