AP Macroeconomics AP Macroeconomics Practice Test 2025
This is the official AP Macroeconomics AP Macroeconomics question paper for 2025, as set in the Model questions examination. It carries 90 full marks and a time allowance of 130 minutes, across 10 questions. On Kekkei you can attempt this AP Macroeconomics past paper online with a timer, get instant AI feedback and step-by-step solutions, and track the topics where you lose marks — completely free. Whether you are revising for your AP Macroeconomics AP Macroeconomics exam or solving previous years' question papers, this 2025 paper is a great way to practise under real exam conditions.
| Level | AP Macroeconomics |
|---|---|
| Subject | AP Macroeconomics |
| Year | 2025 BS |
| Exam session | Model questions |
| Full marks | 90 |
| Time allowed | 130 minutes |
| Questions | 10, all with step-by-step solutions |
Multiple Choice
Select the best answer.
Which of the following transactions would be included in the calculation of the United States' Gross Domestic Product (GDP) for 2025?
A family purchasing a newly constructed home from a builder
GDP measures the market value of all final goods and services produced within a country during a given period. A newly constructed home represents new production. Used goods, stock purchases, and transfer payments are excluded.
Cost-push inflation occurs when:
Rising production costs—such as increases in wages, raw material prices, or energy costs—force firms to raise prices, shifting the aggregate supply curve to the left
Cost-push inflation originates from the supply side. When firms face higher input costs, they pass these on to consumers. Graphically, this is a leftward shift of the SRAS curve, resulting in higher prices and lower output—sometimes called "stagflation."
The natural rate of unemployment includes which types of unemployment?
Frictional unemployment (workers between jobs) and structural unemployment (workers whose skills no longer match available jobs), but NOT cyclical unemployment
The natural rate prevails when the economy is at full employment. It includes frictional unemployment (normal job search time) and structural unemployment (skills mismatch). Cyclical unemployment, which results from recessions, is excluded.
During a recession, an appropriate expansionary fiscal policy would be:
Increasing government spending and/or cutting taxes to stimulate aggregate demand, accepting a larger budget deficit as a short-term cost of economic recovery
Keynesian fiscal policy prescribes deficit spending during recessions. Government spending directly adds to aggregate demand, while tax cuts increase disposable income. The multiplier effect amplifies both impacts.
If the Federal Reserve wants to combat inflation, it would most likely:
Raise the federal funds rate and sell government securities through open market operations, making borrowing more expensive and reducing the money supply to slow aggregate demand
Contractionary monetary policy raises borrowing costs and removes money from the banking system. Both actions cool an overheating economy by reducing aggregate demand.
According to the theory of comparative advantage, a country should specialize in producing goods for which it has the:
Lowest opportunity cost of production, even if another country can produce that good more efficiently in absolute terms, because specialization and trade make both countries better off
David Ricardo's theory demonstrates that trade is mutually beneficial even when one country has an absolute advantage in all goods. What matters is relative efficiency—the opportunity cost of production.
An increase in consumer confidence would be represented on the AD-AS model as:
A rightward shift of the aggregate demand curve, because increased confidence leads consumers to spend more and save less at every price level
When consumers feel optimistic, they spend more and save less at every price level, shifting the AD curve right. The result is higher real GDP and, in the short run, a higher price level.
The government spending multiplier is larger than the tax multiplier because:
Government spending directly increases aggregate demand by the full amount, whereas a tax cut increases demand only by the fraction that is spent (the marginal propensity to consume), with the rest being saved
The spending multiplier is 1/(1-MPC) while the tax multiplier is -MPC/(1-MPC). One dollar of government spending injects a full dollar into the spending stream, whereas one dollar of tax cut is partly saved, producing a smaller initial impact.
The quantity theory of money (MV = PQ) suggests that if velocity (V) and real output (Q) are constant, an increase in the money supply (M) will:
Lead to a proportional increase in the price level (P), meaning that printing more money without increasing real output results in inflation
If V and Q are constant, any increase in M must produce a proportional increase in P. This is the basis for the monetarist argument that "inflation is always and everywhere a monetary phenomenon."
The Phillips Curve illustrates the short-run tradeoff between:
Inflation and unemployment, suggesting that policymakers can reduce unemployment by accepting higher inflation, though this tradeoff may break down in the long run
The Phillips Curve shows an inverse short-run relationship between inflation and unemployment. However, the stagflation of the 1970s showed this tradeoff can break down. The long-run Phillips Curve is vertical at the natural rate of unemployment.
Frequently asked questions
- Where can I find the AP Macroeconomics AP Macroeconomics question paper 2025?
- The full AP Macroeconomics AP Macroeconomics 2025 (Model questions) question paper is available free on Kekkei. You can read every question online and attempt the paper under timed exam conditions.
- Does the AP Macroeconomics 2025 paper come with solutions?
- Yes. Every question on this AP Macroeconomics past paper includes a step-by-step solution, plus instant AI feedback when you attempt it on Kekkei.
- How many marks is the AP Macroeconomics AP Macroeconomics 2025 paper?
- The AP Macroeconomics AP Macroeconomics 2025 paper carries 90 full marks and is meant to be completed in 130 minutes, across 10 questions.
- Is practising this AP Macroeconomics past paper free?
- Yes — reading and attempting this AP Macroeconomics past paper on Kekkei is completely free.