5 Steps to a 5 AP Macroeconomics 2019

212 ❯ Step 5. Build Your Test-Taking Confidence

❯ Free-Response Grading Rubric

Note: Based on my experience, these point allocations roughly approximate the weighting

on similar questions on the AP examinations. Be aware that every year the point allocations

differ and partial credit is awarded differently.

Question 1 (10 points)

Part (A): 2 points

1 point: Given for stating that the spending policy will increase real GDP more than the

tax cut policy.

1 point: Given for stating that the spending multiplier is greater than the tax multiplier. Tax cuts

increase disposable income and some of that is saved, not spent, so the multiplier effect is smaller.

Part (B): 3 points

i. 1 point: Given for stating that regardless of policy, the budget will be in deficit.

ii. 1 point: Given for stating that interest rates will rise.

An additional 1 point is given for the explanation that the government borrowing

causes demand for loanable funds to shift to the right (or the supply of loanable funds

to shift to the left).

Part (C): 1 point

1 point: Given for providing an expansionary monetary policy. Either lowering the discount

rate, lowering the reserve ratio, or buying Treasury securities in an open market operation.

Part (D): 3 points

These are graphing points.

1 point: Given for a correctly drawn money market graph with the vertical axis labeled as

nominal interest rate and the horizontal axis labeled as quantity of money.

1 point: Given for showing a vertical money supply curve and a downward-sloping money

demand curve with the equilibrium interest rate on the vertical axis.

1 point: Given for showing an increased money supply and a decreased interest rate.

MS

MD

Money

Nominal Interest

Rate, i %

M 0 M 1

MS

i 0

i 1

Part (E): 1 point

Identify a reason why greater money supply might not result in a large boost to real GDP.

-^ Money demand is very elastic.
-^ Investment demand is very inelastic.