38 ❯ Step 3. Develop Strategies for Success
one word or a short phrase to receive all of the points. Writing a paragraph here will
only waste your time. As mentioned, any reference to “illustrate” will require you to
draw, or redraw, a graph to receive points. If the question asks you to “define” a con-
cept, you need to devote more time to providing your best definition of that concept.
If you are prompted to “indicate” something, you must simply state what is expected
to happen. For example, suppose you are told that the central bank has sold bonds in
an open market operation and you are asked to indicate what will happen to interest
rates. All you need to do to earn the point is to indicate that interest rates will increase.
You may also get the point if you clearly indicate, preferably with an arrow, in a graph
of the money market that interest rates are rising. The most time-intensive prompt is
usually one that involves “explain.” Suppose you are told that the Canadian dollar is
appreciating relative to the U.S. dollar. Then you are asked to explain how this will
impact domestic output and the price level in the United States. To give yourself the
best chance at receiving all of the points, your response must provide two parts. First,
give a clear statement of what exactly will happen; second, explain why it is going to
happen.
Here are some other things to keep in mind:
• The free-response section begins with a 10-minute reading period. Use this time well
to jot down some quick notes to yourself so that when you actually begin to respond,
you will have a nice start.
• The first parts of the free-response questions are the easiest parts. Spend just enough
time to get these points before moving on to the more difficult sections.
• The questions are written in logical order. If you find yourself explaining Part C
before responding to Part B, back up and work through the logical progression of
topics.
• Abbreviations are your friends. You can save time by using commonly accepted
abbreviations for economic variables and graphical curves, and you will get more
adept at their use as your mastery improves. For example, in macroeconomics you
can save some time by using “OMO” rather than “open market operation,” and in
microeconomics you can use “MRP” rather than “marginal revenue product.”
• Show your work. In recent years, the exam has included more mathematical compo-
nents that allow you to demonstrate that you know a particular economic concept
by computing something. Virtually all of these problems include the prompt “show
your work,” and you will not earn points if you have not set up the mathematical
problem correctly and shown your work clearly. For example, suppose that price is
$5 and 10 units are sold at this price; you are asked to compute total revenue and
show your work. You know that total revenue (P × Q) is obviously $50, but if you
simply state that total revenue is $50, you will not earn the point, because you did
not show your work. The simple fix for this is to write: TR = P × Q = $5 × 10 = $50.
Point earned!