What is AP Macroeconomics?
AP Macroeconomics is a high school–level economics course that examines how economies operate at the national level. Students study economic growth, unemployment, inflation, and policy trade-offs, using models such as the production possibilities curve (PPC) to analyze resource allocation and efficiency.
The AP exam assesses these concepts through multiple-choice questions and analytical free response questions (FRQs) that require students to interpret diagrams and explain economic outcomes.
Where did we get these AP Macroeconomics free response questions?
The AP Macroeconomics free response questions on production possibilities curves compiled on this page are drawn from official College Board exams and closely aligned practice materials. Each question reflects the analytical skills required on the AP exam, including diagram interpretation, opportunity cost analysis, and evaluation of economic growth.
To view all AP Macroeconomics free response questions across the full syllabus, visit the AP Macroeconomics hub page.
How to use these AP Macroeconomics free response questions
These AP Macroeconomics free response questions on production possibilities curves should be used as timed exam practice. Students should focus on clearly explaining trade-offs, opportunity costs, and changes in productive capacity, while accurately labeling PPC diagrams.
Because PPC analysis is often linked to growth and output, students may also benefit from practicing AP Macroeconomics free response questions on GDP.
What is a Production Possibilities Curve?
A Production Possibilities Curve (PPC) is a graphical model that shows the maximum combinations of two goods or services an economy can produce using its available resources and technology. Points on the curve represent productive efficiency, points inside indicate underutilized resources, and points outside the curve are unattainable given current constraints.
In AP Macroeconomics free response questions, the PPC is commonly used to illustrate opportunity cost, economic efficiency, unemployment, and economic growth.
How do PPCs show opportunity cost and growth?
The slope of the PPC reflects opportunity cost — producing more of one good requires sacrificing some quantity of another. A movement along the PPC shows a reallocation of resources, while an outward shift of the curve represents economic growth caused by factors such as investment in capital, improvements in technology, or increases in labor productivity.
Because PPC shifts are closely connected to long-run growth, students may also find it useful to review AP Macroeconomics free response questions on aggregate supply and demand.
AP Macroeconomics Free Response Questions on Production Possibilities Curves
Question 1
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 2
Sweden and Norway use equal quantities of resources to produce food and capital goods. The table below shows the maximum possible production of food OR capital goods for each country.
(a) Draw a correctly labeled graph of the production possibilities curve for Sweden. Place food on the horizontal axis and capital goods on the vertical axis. Plot the relevant numerical values on the graph.
(b) On your graph in part (a), indicate the following. (i) A point that represents an efficient level of production, labeled E (ii) A point that represents an inefficient level of production, labeled I (iii) A point that represents an unattainable level of production, labeled U
(c) Assume Sweden moves from producing 20 units of food and 60 units of capital goods to producing 30 units of food and 40 units of capital goods. What will happen to economic growth in Sweden in the future?
(d) Which country has the comparative advantage in the production of capital goods? Explain.
(e) Based on the table above, identify a specific number of units of capital goods that could be traded for 10 units of food and be mutually beneficial.
Question 3
Countries face trade-offs between producing consumer goods and producing capital goods. (a) Country X takes one hour to produce a unit of consumer goods and two hours to produce a unit of capital goods. Country Y takes two hours to produce a unit of consumer goods and four hours to produce a unit of capital goods. Which country has a comparative advantage in the production of consumer goods? Explain. The following table shows labor-market data for Country X.
(b) Calculate the unemployment rate in Country X. Show your work.
(c) Calculate the labor force participation rate in Country X. Show your work.
(d) Draw a correctly labeled graph of the production possibilities curve for Country X, with consumer goods on the horizontal axis and capital goods on the vertical axis. Indicate a point on your graph, labeled Z, that reflects the current level of unemployment.
Question 4
A country is at full employment and produces two types of goods: consumer goods and capital goods.
(a) Draw a correctly labeled graph of the production possibilities curve, with consumer goods on the horizontal axis and capital goods on the vertical axis. Indicate a point on your graph, labeled X, that represents full employment and a possible combination in which both goods are being produced.
(b) Assume there is an increase in the country’s national savings. Draw a correctly labeled graph of the loanable funds market, showing the change in the real interest rate from the increase in savings.
(c) On the same graph from part (a), show another point, labeled Z, that represents full employment and a new combination of consumer goods and capital goods consistent with the increase in the country’s national savings.
(d) Referring to your answer to part (c), will the long-run aggregate supply curve shift to the right, shift to the left, or remain the same? Explain.
Question 5
Country X and Country Y are trading partners, and both produce furnaces and solar panels. The countries can produce the following amounts using equal amounts of resources. Country X: 6 furnaces or 8 solar panels Country Y: 6 furnaces or 12 solar panels
(a) Which country has an absolute advantage in producing solar panels?
(b) Calculate the opportunity cost of a furnace in Country Y.
(c) Which country has the comparative advantage in producing furnaces? Explain.
(d) If the terms of trade were that 2 furnaces are exchanged for 1 solar panel, should Country X produce solar panels domestically or import solar panels from Country Y?
Answer Key
Question 1
Question 2
Question 3
Question 4
Question 5
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.