Exam Tips & Strategies

Pick a category for targeted advice on MCQ, FRQ, graphs, and high-yield topics.

1

Read all four options before choosing

Wrong answers often sound partially right. Find the one that precisely matches the economic model.
2

Eliminate clearly wrong options first

Cut two choices and your odds jump from 25% to 50%, then pick from what's left.
3

Watch for "which is NOT" questions

Underline NOT in the booklet: you're looking for the one false answer, not the true one.
4

Budget ~1 minute per question

If you're stuck past 90 seconds, mark it and move on. One hard question shouldn't cost you three easy ones.
5

Guess on every question. No penalty.

AP no longer deducts for wrong answers, so never leave a blank. Even a random guess has a 25% chance.

1

Label every part explicitly: (a), (b), (c)

Graders score each part independently, so don't make them hunt through a paragraph to find your answer.
2

Draw a labeled graph whenever asked

A correct diagram earns its points even if your written explanation has errors, so always label axes and curves.
3

Use direction words, not vague ones

"Interest rates change" earns zero; "interest rates decrease" earns the point. Always say increase, decrease, shift left, shift right.
4

Never leave a part blank

A blank is guaranteed zero, but an attempt at least has a chance at partial credit.
5

Follow-through errors still earn credit

If your (a) answer is wrong, complete (b) using it anyway. Graders apply follow-the-error and may award full credit for consistent logic.

1

Always label both axes

Price on vertical, Quantity on horizontal. For AD-AS use Price Level and Real GDP; for money market use Interest Rate and Quantity of Money.
2

Label every curve by name

Write AD, SRAS, LRAS, S, D, MS, MD directly on the curve. A label elsewhere does not count.
3

Show shifts with an arrow and a new label

Draw the original curve, then the new curve with an arrow. Label it AD₂ or AD' so the direction is unambiguous.
4

Mark original and new equilibrium

Use E₁ and E₂ with dashed lines to both axes so the grader can see the exact change in price and output.
5

Draw large and press firmly

A cramped graph is hard to read, so fill at least a quarter of the given space and make curves clearly visible.

1

AD-AS model

Know all shifters of AD, SRAS, and LRAS, and how fiscal/monetary policy closes recessionary and inflationary gaps.
2

Monetary policy transmission chain

Fed buys bonds → money supply ↑ → interest rates ↓ → investment ↑ → AD shifts right → real GDP ↑, price level ↑.
3

Loanable funds market and crowding out

Government borrowing shifts demand for loanable funds right → real interest rate rises → private investment falls.
4

Foreign exchange and open-economy chain

Know how a change in interest rates affects the exchange rate, net exports, and the current account balance.
5

Phillips Curve (short-run vs. long-run)

Short run: inflation-unemployment trade-off exists. Long run: LRPC is vertical at the natural rate, with no trade-off.

1

Supply and demand shifts

Know every demand and supply shifter. Simultaneous shifts can leave price or quantity indeterminate, which is a valid answer.
2

Cost curves and the shutdown rule

Shut down short-run when P < AVC; exit long-run when P < ATC. Know the relationship between MC, ATC, and AVC.
3

Monopoly vs. perfect competition

For monopoly: set MR = MC for quantity, go up to demand curve for price. Mark deadweight loss and economic profit.
4

Externalities and corrective policies

Show the social cost/benefit curve, the inefficient market equilibrium, and how a Pigouvian tax or subsidy restores efficiency.
5

Factor markets (MRP = MRC)

A competitive firm hires labor until MRP = MRC. Its labor demand curve is its MRP curve.

1

Confusing nominal and real values

Real values are adjusted for inflation. When a question asks about output or purchasing power, it means real, not nominal.
2

Treating a movement along a curve as a shift

A change in price moves along the curve; only non-price determinants shift the curve itself.
3

Mixing up short-run and long-run conclusions

Always check which run the question specifies. Long-run perfect competition has zero economic profit and fully flexible inputs.
4

Drawing the wrong graph

Re-read the question: money market vs. loanable funds, SRAS vs. LRAS. Drawing the right graph labeled wrong still costs points.
5

Stopping after the first effect in a chain

FRQs often ask for price AND quantity, or interest rate AND investment. Answer every sub-part or leave points behind.

MCQ Strategy