• 59 questions

AP Macroeconomics Unit 5 Practice Test

Unofficial AP Macro Unit 5 practice: the Phillips curve, money growth, deficits and debt, crowding out and economic growth.

Real output is below its full-employment level. Which pair of actions pushes the economy toward full employment from both sides?

Pick an answer, then press Check answer. Then you see Correct or Not quite, with the reason. Keys: A to D pick, Enter checks.

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Unofficial practice questions, not affiliated with the College Board. Bank checked October 12, 2026.

Next step Next unit: AP Macro Unit 6AP econ supply and demand

All 59 questions

Topic 5.1: Fiscal and monetary policy actions in the short run 7

  • Banks hold ample reserves. How does the central bank move the nominal interest rate in such an economy? College Board, AP Macroeconomics Course and Exam Description, topic 5.1, essential knowledge POL-1.D.6
  • The government borrows to raise its spending while the central bank tightens monetary policy. Which result is certain, whatever the size of each action? College Board, AP Macroeconomics Course and Exam Description, topic 5.1, essential knowledge POL-1.F.2
  • The government cuts taxes and the central bank buys bonds. What happens in the short run? College Board, AP Macroeconomics Course and Exam Description, topic 5.1, essential knowledge POL-1.F.2
  • Real output is above its full-employment level and prices are rising fast. Which pair of actions is contractionary on both sides? College Board, AP Macroeconomics Course and Exam Description, topic 5.1, essential knowledge POL-1.F.1
  • Real output is below its full-employment level. Which pair of actions pushes the economy toward full employment from both sides? College Board, AP Macroeconomics Course and Exam Description, topic 5.1, essential knowledge POL-1.F.1
  • To close a recessionary gap, a government can spend $50 billion more or cut taxes by $50 billion. Which shifts aggregate demand further? College Board, AP Macroeconomics Course and Exam Description, topic 5.1, essential knowledge POL-1.A.4
  • Which of these four is a tool of fiscal policy and not of the central bank? College Board, AP Macroeconomics Course and Exam Description, topic 5.1, essential knowledge POL-1.A.2
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Topic 5.2: The Phillips curve 14

  • A central bank keeps expanding the money supply to hold unemployment below its natural rate. What is the long-run result? College Board, AP Macroeconomics Course and Exam Description, topic 5.2, essential knowledge MOD-2.E.1
  • A gain in productivity lowers costs for most firms. How does the Phillips curve graph show it? College Board, AP Macroeconomics Course and Exam Description, topic 5.2, essential knowledge MOD-3.B.2
  • A jump in the price of oil raises costs for most firms. How does the Phillips curve graph show it? College Board, AP Macroeconomics Course and Exam Description, topic 5.2, essential knowledge MOD-3.B.2
  • An economy is in a recessionary gap and no policy action is taken. What happens to unemployment in the long run? College Board, AP Macroeconomics Course and Exam Description, topic 5.2, essential knowledge MOD-2.I.1
  • Businesses cut investment and aggregate demand falls. How does the Phillips curve graph show the short-run result? College Board, AP Macroeconomics Course and Exam Description, topic 5.2, essential knowledge MOD-3.B.1
  • Consumer confidence jumps and aggregate demand rises. How does the Phillips curve graph show the short-run result? College Board, AP Macroeconomics Course and Exam Description, topic 5.2, essential knowledge MOD-3.B.1
  • In the 1970s many countries had high inflation and high unemployment at once. What is that combination called? College Board, AP Macroeconomics Course and Exam Description, topic 5.2, essential knowledge MOD-3.B.2; fact read in Wikipedia, "Stagflation"
  • The natural rate of unemployment is 5%. The economy sits on its short-run Phillips curve at 3% unemployment. What does that point show? College Board, AP Macroeconomics Course and Exam Description, topic 5.2, essential knowledge MOD-3.A.5
  • The natural rate of unemployment is 5%. The economy sits on its short-run Phillips curve at 8% unemployment. What does that point show? College Board, AP Macroeconomics Course and Exam Description, topic 5.2, essential knowledge MOD-3.A.5
  • New job-matching websites cut the time workers spend between jobs, and frictional unemployment falls for good. What happens on the Phillips curve graph? College Board, AP Macroeconomics Course and Exam Description, topic 5.2, essential knowledge MOD-3.B.3
  • On a Phillips curve graph, where is the economy's position at any moment? College Board, AP Macroeconomics Course and Exam Description, topic 5.2, essential knowledge MOD-3.A.2
  • What does the short-run Phillips curve show? College Board, AP Macroeconomics Course and Exam Description, topic 5.2, essential knowledge MOD-3.A.1
  • What shape does the long-run Phillips curve have? College Board, AP Macroeconomics Course and Exam Description, topic 5.2, essential knowledge MOD-3.A.3
  • Where is long-run equilibrium on a Phillips curve graph? College Board, AP Macroeconomics Course and Exam Description, topic 5.2, essential knowledge MOD-3.A.4

Topic 5.3: Money growth and inflation 8

  • An economy is at full employment and the central bank raises the money supply. What is the long-run effect on real output? College Board, AP Macroeconomics Course and Exam Description, topic 5.3, essential knowledge POL-3.A.2
  • By the quantity theory of money, what sets the rate of inflation in the long run? College Board, AP Macroeconomics Course and Exam Description, topic 5.3, essential knowledge POL-3.A.3
  • The money supply doubles while velocity and real output stay the same. What happens to the price level? College Board, AP Macroeconomics Course and Exam Description, topic 5.3, essential knowledge POL-3.A.3; fact read in Wikipedia, "Quantity theory of money"
  • The money supply is $500 billion, velocity is 4 and real output is 1,000 billion units. By the equation of exchange, what is the price level? College Board, AP Macroeconomics Course and Exam Description, topic 5.3, essential knowledge POL-3.A.3; fact read in Wikipedia, "Quantity theory of money"
  • The money supply is $800 billion and velocity is 5. What is nominal GDP? College Board, AP Macroeconomics Course and Exam Description, topic 5.3, essential knowledge POL-3.A.3; fact read in Wikipedia, "Quantity theory of money"
  • Nominal GDP is $6,000 billion and the money supply is $1,500 billion. What is the velocity of money? College Board, AP Macroeconomics Course and Exam Description, topic 5.3, essential knowledge POL-3.A.3; fact read in Wikipedia, "Quantity theory of money"
  • Velocity is steady and real output grows 2% a year. The central bank lets the money supply grow 6% a year. About what rate of inflation follows? College Board, AP Macroeconomics Course and Exam Description, topic 5.3, essential knowledge POL-3.A.3
  • What results when the money supply shrinks too fast for a sustained period of time? College Board, AP Macroeconomics Course and Exam Description, topic 5.3, essential knowledge POL-3.A.1

Topic 5.4: Government deficits and the national debt 7

  • A government's deficit shrinks from $400 billion last year to $250 billion this year. What happens to its national debt this year? College Board, AP Macroeconomics Course and Exam Description, topic 5.4, essential knowledge POL-3.B.2
  • GDP falls in a recession and no law is changed. What happens to the budget deficit, and why? College Board, AP Macroeconomics Course and Exam Description, topic 5.4, essential knowledge POL-1.C.2
  • In one year a government collects $900 billion in taxes, buys $700 billion of goods and services and pays $300 billion in transfers. What is its budget balance? College Board, AP Macroeconomics Course and Exam Description, topic 5.4, essential knowledge POL-3.B.1
  • In one year a government collects $1,200 billion in taxes, buys $800 billion of goods and services and pays $250 billion in transfers. What is its budget balance? College Board, AP Macroeconomics Course and Exam Description, topic 5.4, essential knowledge POL-3.B.1
  • The national debt is $5,000 billion at the start of a year. The government runs a deficit of $300 billion in that year. What is the debt at the end of the year? College Board, AP Macroeconomics Course and Exam Description, topic 5.4, essential knowledge POL-3.B.2
  • What cost does a large national debt put on a government's later budgets? College Board, AP Macroeconomics Course and Exam Description, topic 5.4, essential knowledge POL-3.B.3
  • What sets the budget deficit apart from the national debt? College Board, AP Macroeconomics Course and Exam Description, topic 5.4, essential knowledge POL-3.B.3

Topic 5.5: Crowding out 7

  • A government pays for new spending by borrowing. Aggregate demand rises by less than the spending multiplier alone predicts. Why? College Board, AP Macroeconomics Course and Exam Description, topic 5.5, essential knowledge POL-3.C.3
  • To cover a larger deficit, a government sells more bonds to savers. What follows for the real interest rate and for private investment? College Board, AP Macroeconomics Course and Exam Description, topic 5.5, essential knowledge POL-3.C.2
  • What can crowding out do to an economy in the long run? College Board, AP Macroeconomics Course and Exam Description, topic 5.5, essential knowledge POL-3.C.4
  • What is crowding out? College Board, AP Macroeconomics Course and Exam Description, topic 5.5, essential knowledge POL-3.C.3
  • Which kind of spending is most likely to be crowded out by government borrowing? College Board, AP Macroeconomics Course and Exam Description, topic 5.5, essential knowledge POL-3.C.3
  • Which model is used to show crowding out? College Board, AP Macroeconomics Course and Exam Description, topic 5.5, essential knowledge POL-3.C.2
  • Why does a budget deficit lead to government borrowing? College Board, AP Macroeconomics Course and Exam Description, topic 5.5, essential knowledge POL-3.C.1

Topic 5.6: Economic growth 11

  • A factory's 300 workers make 900,000 units a year. What is its average labor productivity? College Board, AP Macroeconomics Course and Exam Description, topic 5.6, essential knowledge MEA-2.B.3
  • A firm installs robots on its assembly line. Which determinant of productivity has changed? College Board, AP Macroeconomics Course and Exam Description, topic 5.6, essential knowledge MEA-2.B.4
  • A recession ends and unemployed workers are hired back. How does the production possibilities model show that? College Board, AP Macroeconomics Course and Exam Description, topic 5.6, essential knowledge MOD-1.B.2
  • Economic growth shifts the production possibilities curve outward. What is the matching change in the AD-AS model? College Board, AP Macroeconomics Course and Exam Description, topic 5.6, essential knowledge MOD-1.C.1
  • How is economic growth measured? College Board, AP Macroeconomics Course and Exam Description, topic 5.6, essential knowledge MEA-2.B.1
  • In one year a country's real GDP grows 2% and its population grows 3%. What happens to real GDP per capita? College Board, AP Macroeconomics Course and Exam Description, topic 5.6, essential knowledge MEA-2.B.1
  • Real GDP is $840 billion in a country of 24 million people. What is real GDP per person? College Board, AP Macroeconomics Course and Exam Description, topic 5.6, essential knowledge MEA-2.B.1
  • Real GDP per capita rises from $40,000 to $41,200 in a year. What is the rate of economic growth? College Board, AP Macroeconomics Course and Exam Description, topic 5.6, essential knowledge MEA-2.B.1
  • What does the aggregate production function say about capital and output per person? College Board, AP Macroeconomics Course and Exam Description, topic 5.6, essential knowledge MEA-2.B.5
  • Which change raises labor productivity? College Board, AP Macroeconomics Course and Exam Description, topic 5.6, essential knowledge MEA-2.B.4
  • With other factors held constant, how are aggregate employment and aggregate output related? College Board, AP Macroeconomics Course and Exam Description, topic 5.6, essential knowledge MEA-2.B.2

Topic 5.7: Public policy and economic growth 5

  • A cut in the tax on business profits leads firms to build more factories. Apart from raising aggregate demand now, what is its long-run effect? College Board, AP Macroeconomics Course and Exam Description, topic 5.7, essential knowledge POL-4.A.3
  • A government gives grants for job training and for university research. Which two sources of growth is it aiming at? College Board, AP Macroeconomics Course and Exam Description, topic 5.7, essential knowledge POL-4.A.1
  • A government pays for child care so that more parents can take jobs. Through which channel can that raise real GDP per capita? College Board, AP Macroeconomics Course and Exam Description, topic 5.7, essential knowledge POL-4.A.1
  • How do supply-side fiscal policies work? College Board, AP Macroeconomics Course and Exam Description, topic 5.7, essential knowledge POL-4.A.3
  • Which government action aims most directly at long-run growth? College Board, AP Macroeconomics Course and Exam Description, topic 5.7, essential knowledge POL-4.A.2

How this list was compiled: Our own questions, written to Unit 5 (Long-Run Consequences of Stabilization Policies) of the College Board's AP Macroeconomics Course and Exam Description, effective fall 2026, https://apcentral.collegeboard.org/media/pdf/ap-macroeconomics-course-and-exam-description.pdf, read 2026-10-12: topics 5.1 to 5.7. The rule behind each answer was read on 2026-10-12 in the essential knowledge statement of the course description named under the question; the equation of exchange and the word stagflation were read in the Wikipedia articles named. Every calculated answer is worked from the numbers the question prints and was worked out a second time. Licence: Own work. Short quotations from the public documents named under each question.

How it works

This AP Macroeconomics Unit 5 practice test has 59 questions of our own on the long-run consequences of stabilization policies. The College Board owns AP and did not make or endorse these questions: the practice is unofficial.

Read the full guide

What Unit 5 covers

The College Board's course description, effective fall 2026 and read October 12, 2026, gives Unit 5 seven topics and no weights among them, so the spread is ours: fiscal and monetary policy together (7 questions), the Phillips curve (14), money growth and inflation (8), deficits and the national debt (7), crowding out (7), economic growth (11) and public policy for growth (5).

Graphs asked in words

The exam has you draw the Phillips curve and the loanable funds market. Here each graph is put into words: which curve moves, which way, and where the economy ends up. Budget balances, velocity and growth rates are worked from the numbers in the question.

  • On a Phillips curve graph, a demand shock moves the economy along the short-run curve. A supply shock moves the curve itself.
  • For crowding out, say each link: more government borrowing, a higher real interest rate, less private investment, slower growth.

Questions and answers

What is Unit 5 of AP Macroeconomics?

Long-Run Consequences of Stabilization Policies, the fifth of six units. It carries 20 to 30% of the multiple-choice section, by the College Board's course page, and the description allows about 8 to 10 class periods.

What should an AP Macro Unit 5 study guide cover?

An AP Macroeconomics Unit 5 study guide needs the terms behind each topic: policy mixes; both Phillips curves, the natural rate and supply shocks; the equation of exchange; budget balance and national debt; loanable funds and crowding out; productivity, human and physical capital; supply-side policy.

Why is the long-run Phillips curve vertical?

In the long run wages and prices adjust fully, so unemployment goes back to its natural rate whatever the rate of inflation. The trade-off between the two holds only in the short run.

What is the difference between the budget deficit and the national debt?

The deficit is one year's gap between tax revenue and government purchases plus transfer payments. The debt is the total the government owes, and each year of deficit adds to it.

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