# ANSWERS! 2026 Macroeconomics FRQ Unboxing - (Best Guess)

## Метаданные

- **Канал:** ReviewEcon
- **YouTube:** https://www.youtube.com/watch?v=c1siSJK2qFE
- **Дата:** 10.05.2026
- **Длительность:** 12:05
- **Просмотры:** 6,733
- **Источник:** https://ekstraktznaniy.ru/video/51467

## Описание

Here is a quick, low edit, video covering my best guesses as to what the answers to the 2026 Microeconomics FRQ will be when the rubrics are officially released. 

Here is a link to the questions from the College Board: https://apcentral.collegeboard.org/media/pdf/ap26-frq-macroeconomics.pdf

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https://www.reviewecon.com/games-activities

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## Транскрипт

### Segment 1 (00:00 - 05:00) []

Hi everybody, Jacob Reed here from reviewecon. com. We're about to go over the 2026 macroeconomics exam question that was released a little bit ago. Uh before we get into it, I want to thank everybody for your support of reviewecon. com. I really appreciate it. If you haven't already done so, please subscribe to the channel. I know the exam is over, but it does really help uh reviewecon with the algorithm for YouTube. Um also uh one more thing um I want to remind everybody I don't know what your answers are going to be. These are just my guesses of what I think will show up on the rubric based on my understanding of macroeconomics as well as previous rubrics that have been released. Um but I can't guarantee I'm correct uh and sometimes the rubric surprise me a little bit, but this is what I think the answers are. Let me know what you think uh about my answers in the comments and uh this was the last exam for most of my students. Um hopefully it was hopefully your exams went well as well. If you have uh any more uh macroeconomics or any more AP exams, I hope they go well for you. All right, let's go ahead and get into the question. All right, so uh first off we have uh the economy of Mechanipy. Not exactly sure how to pronounce that one more time, uh but they have they are currently in short-run equilibrium and they have an inflationary gap. So, we're going to draw an AS-AD model showing the aggregate supply both long-run and short-run as well as the aggregate demand curve and we're going to have the price level, real output marked as well as the full employment level of output. There you go, there's my answer there. I think that graph is going to be two points. One point for the um current equilibrium quantity with the AS-AD uh with the short-run aggregate supply curve and AD curve there. And um and the second point will be for adding in the LRAS to the left of that um current equilibrium point with YF below. All right, there's our inflationary gap AS-AD model. Okay, moving on to part B. Assume that policy makers take no action to close the inflationary gap. We're going to explain how Macanipia's economy will self-adjust to full employment in the long run. So, this is just a natural movement back to long run equilibrium with no policy interventions. Here's our answer. In the long run, wages, or you could say other resource prices as well, will increase causing the short run aggregate supply curve to shift to the left until real output decreases to the full employment level of output. And if you have an answer something like that, I think you'll get your point. On to part C, suppose instead that Macanipia's central bank is considering using monetary policy to close the inflationary gap in the short run and they currently have limited reserves. We're just going to identify an open market operation that the central bank of Macanipia can use to close that gap in the short run. All right, so remember open market operations is just two things. It's either buying bonds or selling bonds. And when it comes to limited reserves, those work to change the policy rate. So, since they're trying to slow down the economy, they are going to want to increase the interest rate, which means they want to decrease the supply in the money market, which will cause that increase in the interest rate. So, decreasing the supply comes from selling bonds. Selling bonds makes the money supply smaller and eventually leads to the economy shrinking a bit. All right, on to the next part. Next we're going to draw a money market showing the selling of bonds that we just identified. There are a lot of consistency points in these questions, by the way. So, if any of your answers differed than the following answers, we'll just need to be opposite of whatever I have here in order to get those follow-up points, most likely. All right, so I have my downward sloping money demand curve, my vertical money supply curve. That'll be your first point showing that first equilibrium. The second point will probably be from shifting that supply curve to the left showing the selling of bonds. and you got to show that increase in that nominal interest rate. I think you'll get two points for this graph. On to part D, based solely on the change in the interest rate that we just showed, will each of the following increase, decrease, or remain un remain the same in the short run? First, the international financial capital flows into Mechanopia and we have to explain this one. Here's my answer here. It's going to increase and that's because of the higher interest rates that we just saw. So, if those foreign investors are going to seek those higher interest rates that are found in Mechanopia. I'm a little uncomfortable having my explanation here so short, but I think that's all they're going to be looking for. All right. On to the next part, the price of previously issued bonds. Remember that we just saw the interest rate go up in our money market and the prices of previously issued bonds always go in the opposite direction. So, decrease. On to part D III, domestic private domestic investment spending. That's just another term for gross investment. Hopefully, you understood that and since the interest rate went up, we're going to have a inverse relationship to the purchases of physical capital or gross investment. And so, that's a decrease as

### Segment 2 (05:00 - 10:00) [5:00]

well. So, it's just the opposite of the interest rate because when interest rates are high, businesses borrow less and purchase less domestic investment. All right. On to part E, based solely on the change in private domestic investment spending identified in part D, will the unemployment rate in Mechanopia increase, decrease, or remain the same in the short run? And we have to explain again. Here's my answer here. Increase because the decrease in investment spending will decrease aggregate demand, which decreases real output. All right, I think you're going to need that investment spending there. It would probably be even better if my answer said gross investment because that's the specific demand shifter. So, there's a chance I may I may be a short there, but I think I'll make it there. I'll make the bar I think where they'll set it. So, that decrease you got to connect it to the graph though of that AS/AD model shift. All right, on to the second question. We have a whole bunch of numbers in a table and with all those numbers the first thing we need to do is say how many people are employed in Foxhound. This is the country there. By the way, Foxhound is currently in short-run equilibrium and they've got that data in the table. All right, so uh we have our labor force which is 15 million people. We have the number of people that are not working but are looking for work. Those are unemployed people. So, the people that are employed are the is going to be the labor force minus the unemployed. So, I'm going to take that 15 million, subtract the uh 900,000 and that gives me 14,100,000 people. And I think that's what you'll need. I don't you do and you don't have to show your work on this one. On to part B, you're going to calculate the unemployment rate found in Foxhound and we're going to show our work here. And so, the unemployment rate remember is the labor force uh excuse me, is the number of unemployed people divided by the labor force then times 100. And so, I'm just going to plug in the numbers up there. That 900,000, those are the number of unemployed people. The 15 million is the uh number of people in the labor force. Times that by 100, that's a 6% unemployment rate. And you do have to show your work in order to get this point. Over to part C, draw a correctly labeled graph of the short-run Phillips curve uh and long-run Phillips curve and we're going to label uh the current short-run equilibrium as point X and we're going to plot the relevant values on the graph. And so, here's what we I've got here. We have our downward-sloping short-run Phillips curve. I have the current equilibrium unemployment rate that I just calculated. That is 6% and uh I have a 3% natural rate. That's from the table up above and we have the current inflation rate as 2% also from the table we already saw. All right, I think you'll get two points from this. I'm not exactly sure exactly where those points are going to fall, but I think the ref will be two points. On to part D, if someone in if some individuals are counted as who are counted as employed retire, will the unemployment rate increase, decrease, or remain the same? So, remember employed people are part of the labor force and they are not unemployed, but then when people become retired, they are neither unemployed nor employed. They're not part of the labor force even. So, that leads me to my answer here. It's going to increase and that's because the size of the labor force will decrease and the number of unemployed will remain unchanged. And I think that'll be enough in regards to referencing the formula. It might even be better if you reference the formula as well, but I think that'll be enough. On to part three or question number three. Now, we have Lizland. They're a small island nation and the currency is the Lizland crown. The economy is in short-run equilibrium. They have a 600 million crown recessionary gap. So, the policy makers want to take action to close that gap. First, we've got our central bank. They have ample reserves and we have to identify monetary policy action that they would take. Now, this when we have ample reserves, there are two possible things you could say here. That is either decrease interest on reserves or you could say decrease administered rates. Either of those I think are going to get a point, but that decrease is going to help close that recessionary gap. On to part A II, we're told that the government is considered changing its spending. That's fiscal policy here and the marginal propensity to consume is. 75. We're going to calculate the minimum change of government spending and identify the direction of that change required to fully close the 600 million crown recessionary gap in the short run and we're going to show our work. First, I'm going to calculate my multiplier. That's 1 / 1 - the MPC, which is. 25, so that's what it reduces down to, 1 / 0. 25, which gives us a spending multiplier of four. Then, uh I'm also going to uh take that 600 million divided by that multiplier of four, and that gives us a $150 million change in GDP, and that needs to be an increase in spending because that will increase real output, closing that

### Segment 3 (10:00 - 12:00) [10:00]

recessionary gap. All right. On to part B, we're going to assume that the government of Lizland uh decides to change its spending, the amount that we calculated, and then based solely on that change will the price level increase, decrease, or remain the same? And we're going to explain here. And the explain explanation, remember you always want to connect it to a graph if possible. I'm connecting it to the AS-AD model, so it's an increase, and that's because the $150 million increase, or million crown increase, in government spending will cause the aggregate demand curve to shift to the right. And I think I think you need that AD connection there in order to get this point. On to part C, uh the nations of Lizland and Ando are trading partners with flexible exchange rates. The currency of Ando is the Ando note, ND, and we're going to draw a correctly labeled graph of the foreign exchange market for the Lizland crown. And based solely on the change in the price level in part B, uh we have to show the change in the international value of the Lizland crown on our graph. Now, remember, the um the uh when our when the price level went up, as we just identified, that's going to make imports relatively cheaper, and it's going to make uh exports uh less appealing to foreign consumers because the price levels went up. So, that's going to lead me to my graph here. We have our downward-sloping demand curve, upward-sloping supply curve. We have a rightward shift of that supply because they're going to be importing more, and that D causes the exchange rate to depreciate. I believe you could also have a decrease in demand here because of the decrease in uh the exports as a result of the higher price level and that is also going to cause the currency to depreciate. And I think either one of those shifts is going to be acceptable. And there you have it. Those are my best guess answers to the macroeconomics exam this year. I hope it went well for you. Again, I really support your I really again, I really appreciate your support of reviewecon. com. I wish everybody the best of luck on the rest of the school year and thank you again. Take care.