Multiple-Choice Questions

1. YOU’VE GOT 60 PROBLEMS, SO MAKE SURE RUNNING OUT OF TIME ISN’T ONE MORE. Of the 60 questions, don’t allow yourself to become stuck on or obsessed with one or two questions. Most students run out of time not because of the overall difficulty level but because of spending too much time on too few questions. If“you don’t know the answer, star it, and return to it later. The time limit works out to be around 70 seconds per question, yet no one question is worth more points than others. Of the two sections of the test, the multiple-choice part is the one that you must be most mindful of the time.
2. WHEN IN DOUBT, GRAPH IT OUT. You will definitely be required to draw graphs in the free-response section, but doing so can be very helpful in the multiple-choice section as well. A brief graph drawn in the margins can easily lead to the correct answers. For example, let’s look at the following sample question:

Which of the following changes in the demand for and the supply for widgets will definitely result in a decrease for both the equilibrium price and quantity of widgets?

Trying to visualize all of those options can seem overwhelming; however, a well-prepared student could do a quick sketch of these supply and demand graphs. Graphing it out can easily clarify the correct answer. Even economic experts are fond of drawing out graphs to be sure of an answer. By the time a student has drawn option C, he or she will have identified the correct answer and can move on to the next question.
3. NO QUESTION LEFT BEHIND. Answer every question. There is no penalty for incorrect answers, only points for right ones. So if you have no clue about the answer, guess anyway. Each question will have five choices, and you at least have a 20 percent chance at getting it right.
4. ABSOLUTELY NOT THE RIGHT CHOICE. Be careful when dealing with a question that uses absolutes. Anytime a possible answer uses absolute words such as always, never, rarely, and none, that choice is usually not the correct one.
5. STAY POSITIVE, BUT RECOGNIZE THE NEGATIVES. Make sure to read every word of the question carefully. A common way test writers employ negatives is found in this sample question:

The long-run growth rate of an economy will be increased by an increase in all of the following except

(A) capital stock.
(B) labor supply.
(C) real interest rate.
(D) rate of technological change.
(E) spending on education and training.
A student could possibly miss the word except at the end of the question and just put answer A, which would be correct if there was no except, and miss the correct answer, C. Another similar technique to confuse students is “which of the following is NOT . . .”
6.DON’T BE INTIMIDATED BY A QUESTION’S LOOKS. Some questions can look overwhelmingly difficult, but when approached correctly, they are usually less intimidating than their looks. Here is a sample of a question that can initially appear very difficult:

An opportunity cost is entailed in which of the following situations?

  I. A student decides to attend college full-time.
 II. A family uses its $20,000 savings to purchase an automobile.
III. A farmer decides to grow more wheat and less corn.

(A) I only
(B) II only
(C) III only
(D) I and III only
(E) I, II, and III
Consider questions of this nature to be merely glorified true/false questions“ Walk through all of the options, and cross out the false ones. In this case, all three are true, “making E the correct answer. Here is another sample of a question type that can appear intimidating:

Based on the economic figures in the table above, what is the unemployment rate?

(A) 0%
(B) 5%
(C) 10%
(D) 15%
(E) 33%
Just because there are four different options under economic data does not mean all of them need to be calculated. In this case, a student should recognize that the unemployment rate is calculated by dividing the number of unemployed by the labor force. Hence, you can ignore two of the four options under economic figures, and a simple calculation gives you the correct answer, C.

Free-Response Questions
After the multiple-choice section and a short break, you move on to the free-response questions. This 60-minute section makes up one-third of your AP score. This section is comprised of one long question, worth about 16 percent of your final AP score, and two short questions, each worth about 8 percent. Try to use no more than 25 minutes for the long question and 12.5 minutes for each of the two short questions. Past students report that they are more likely to run out of time on the multiple-choice section as opposed to the free-response questions, so be sure to double-check all of your answers in the free-response section. Here are some general tips for success on both the AP Microeconomics and the AP Macroeconomics free-response questions.
1. YOU GET SECOND CHANCES. They don’t come only in life but also on the AP Economics exam. A very important thing to know about the free-response questions is that even if you answer the first part of a question incorrectly, it is still possible to earn “consistency” points on other parts of the question related to the initial incorrect answer. To give you an example from a question similar to one on a recent AP Microeconomics exam, let’s look at the monopoly graph in Figure 1.1. Students were asked to begin by identifying the profit-maximizing quantity for the monopolist. From there, students were asked to identify the price, total revenue, and total cost of production; all of these answers are based on the profit-maximizing quantity chosen at the beginning. If a student chooses the wrong quantity, technically all of the following answers will be wrong as well. However, if a student incorrectly identifies the wrong quantity of 25 (the correct answer is a quantity of 15 and a price of 40), he/she missed that point but is still eligible to get the other questions correct! The other answers are now based on the incorrect quantity of 25, which would result in different price, cost, and revenue answers that could be counted as correct. Despite this initial incorrect answer, several consistency points could be earned.

Figure 1.1 Free-Response Example: Sample Monopoly Graph

Here is another example of how students can earn consistency points despite a wrong answer, this time from the AP Macroeconomics exam: The question reads “Interest rates increase in the United States relative to Japan. Based on this change, what will happen to the value of the U.S. dollar vs. the Japanese yen, and exports from the U.S. to Japan? Explain.” The correct answer is that the demand for the U.S. dollar would increase, making the U.S. dollar appreciate in value vs. the yen. As the U.S. dollar appreciates vs. the yen, exports to Japan decrease, because U.S. goods are now relatively more expensive for the Japanese. However, if a student incorrectly claims the U.S. dollar depreciates, one point is taken off, but not all is lost. The student can still earn a consistency point by stating that exports to Japan would increase, based on the initial wrong answer of a depreciated U.S. dollar.
2. MIND YOUR Ps AND Qs. Always completely label your graphs. You are guaranteed to have to draw graphs on the free-response section, and you will get several points on the test for labeling your graphs correctly. At a minimum, this means putting the correct label on the x- and y-axes and all your curves. Also, be sure to show with an arrow when the curve shifts, and clearly identify any changes in price or quantity. For example, if the demand curve increases, leading to an increase in price, you could label the first curve D₁ and the new curve D₂, just like the graphs you will see in this book. The same goes for price and quantity, or any other item you are asked to label. Also, the graders of AP tests may take off points for not drawing dotted lines to the x- and y-axes to show price and quantity; be sure to do this. To be sure of how to correctly label a graph, see any graph in this book.
3. SAVE THE FIVE-PARAGRAPH ESSAY FOR ANOTHER AP EXAM. Being verbose, or using far more words than are required, is a common mistake students make. If a question asks you to identify a price or quantity, all that is required is to list the answer, (e.g., price of $5, quantity of 20). The amount of writing required for full credit on a question is actually quite minimal. See more information on what is required for a correct answer in item 5 below.
4. A WELL-DRAWN GRAPH IS WORTH A THOUSAND WORDS. OK, maybe not a thousand words, but it is worth a few points on the AP exam. AP graders are looking for specific labels and information when grading your exam, and a well-drawn, neat graph with correct shifts can clearly display your understanding of content. There are just a few graphs to memorize and know. Draw them neatly and clearly, and show your shifts. This will lead to success on the test.
5. EXPLAIN? IDENTIFY? DRAW? SHOW?—WHAT ARE GRADERS LOOKING FOR? Speaking from our vast experience as AP exam graders, you would be surprised at how many students know the content yet lose points because they either don’t fully read the question or misunderstand what the question is asking. Students should pay careful attention to understanding what the question is actually asking. Here are a few common phrases that often confuse students and an explanation of what is expected for full credit when asked.
■ Show your work. Do exactly what it says here. For example, if you are asked to calculate profit on the AP Microeconomics exam and show your work, don’t just say that total revenue minus total cost equals profit, which is $100. This will not suffice for credit (write out that $150 − $50 = $100). Plug in all the numbers, and show all of your work.
■ Explain. You may not always be asked for an explanation, but be sure to give one if asked. Even if you have the correct answer, no point will be given if the explanation is missing. This is when you should write a whole sentence or two. Here is an example question: “What happens to economic growth if real interest rates decrease? Explain.” You will not receive full credit by merely stating that economic growth will increase because interest rates decreased. A correct answer for full credit would say: “Economic growth will increase, because lower real interest rates will lead to increased investment and capital formation.” Explain your whole line of reasoning, such as this answer does. Note: If the question does not ask you to explain, it’s not required for credit.
■ Identify or determine. When you see these words, graders are expecting a straightforward answer that requires little writing. The question may ask you to identify the price, quantity, or profit.
■ Draw or show. This is when graders are looking for a graph or a change on a graph. A question using these words may look like this: “Draw a correctly labeled loanable-funds graph, and show how an increase in government borrowing affects the real interest rate on the graph.” Here a student should label all axes and curves, and clearly show all shifts with arrows.
■ Calculate. When a question asks you to calculate, it is asking you for a specific number, not just an area on a graph. Let’s assume a correct calculation is 3 × 100 =  300. If you set up the problem correctly but mistakenly write the wrong answer, you may still get credit! For example, if you write 3 × 100 = 400, you will likely still receive credit by setting up the problem correctly with 3 × 100.

Here are a few other tips and reminders going into the AP Economics exam’s free-response section:
■ Be sure to practice free-response questions in this book. The questions in this book have been carefully developed to be similar to what you can expect to see on the actual exam.
■ Be neat and organized. AP Economics graders are looking for specific words, numbers, or labels on a graph, and clear, legible answers will help your cause. Also, clearly label the question number you are answering. If you are answering question 2(ii), label it as such before your answer.
■ Memorize the various graph labels and curves. You will get several points just by labeling your graphs correctly. There are only a few graphs to know for both the Microeconomics and Macroeconomics exams. Know them well.
■ Don’t repeat the question in your answer.
■ Write your answers in the correct designated answer section. AP graders are instructed not to grade answers written in the wrong section. You would be surprised how many times students lose points for writing their answers or drawing graphs in the wrong section of the answer booklet. The location of the test booklet designated for answers is clearly labeled, but always double-check.

Here are some tips that are specific to either the Microeconomics or Macroeconomics free-response questions.