econland student guide 11 march 2018 · materials and tools. these are described in section 5...

StudentGuide

EconlandTeachingNote,Version1July2017©IntegrityMediaGroupFZLLE

EconlandTeachingNote,Version1.1June2017©IntegrityMediaGroupFZLLE

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TableofContents

1. Introduction..........................................................................................................................3

2. TargetAudienceandLearningObjectives.............................................................................3

3. HowtoPlay...........................................................................................................................4

4. OverviewofScreens..............................................................................................................7

5. MacroeconomicsLearningSection.....................................................................................11

6. TechnicalRequirements......................................................................................................12

APPENDIX:Glossary.....................................................................................................................13


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1. IntroductionEconlandisalearningplatformandsimulationgamedesignedtoteachstudentsaboutMacroeconomicsinanengagingway.WhenplayingEconland,studentslearnabouthowtheeconomyworksbyunderstandingtheeconomicenvironment,makingeconomicpolicydecisionsandanalyzingtheresultsofeconomicpolicydecisions.Inadditiontothesimulationgame,theEconlandplatformcontainsarangeofresourcesthatprovidesupportforlearners.ThisTeachingNotescontainsthekeyinformationforrequiredtousetheEconlandsimulationgameandaccompanyinglearningplatform.2. TargetAudienceandLearningObjectivesThetargetaudienceofEconlandincludesanyonewithaninterestorneedtolearnMacroeconomics.UsersofEconlandincludeCollegeorUniversitystudentstakinganIntroductiontoEconomicsorEconomicsPrinciplescourse,HighSchoolstudentspreparingforAPtests,A-Levels,InternationalBaccalaureateorotherexams,orprofessionalsneedingtolearnkeyeconomicconceptsandtheconsequencesofeconomicpolicydecisions.TheuseofEconlandcanbeadaptedbytheinstructortofitthelevelofeachgroupoflearners.EconlandisdesignedtosupportthemostcommonlyusedIntroductoryMacroeconomicscoursecurriculathroughouttheworld.MacroeconomicscoursestypicallycovereconomicconceptssuchasGrossDomesticProduct,Unemployment,Inflation,BudgetDeficits,Productivity,AggregateDemand&AggregateSupplyandMonetary&FiscalPolicy.WhenstudentsreachthetopicsofAggregateDemand&AggregateSupplyandMonetary&FiscalPolicy,itisoftenachallengeforinstructorstodeliverthistheoryinanengagingway.Thesimulationgamebringseconomicpolicymakingtolifeforstudentsbylettingthemunderstandtheeconomicenvironmentoftheircountry,makemonetaryandfiscalpolicydecisions,andanalyzetheconsequencesoftheirdecisionmaking.Atthesametime,usingEconlandconsolidatesstudentunderstandingofunderlyingeconomicconceptstaughtatearlierstagesofanEconomicscourse(includingGDP,Unemployment,Inflation,BudgetDeficit).PleaserefertotheGlossaryforafulllistoftheconceptscoveredinthegame.Atadeeperlevel,Econlanddevelopscriticalthinkingandproblemssolvingskills.Itofferstheopportunitytolearnaboutmodelingandsystemdynamics.


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3. HowtoPlayInEconLand,studentsmanagetheeconomyofamediumsizedcountry.Foraperiodofsevenrounds(=years),playersmakeeconomicpolicydecisions(MonetaryandFiscalPolicy)fortheircountryinordertomakethepopulationhappyabouttheeconomy.Thefourdecisionsthatstudentsmakeduringeachroundofthesimulationgameare:

• InterestRate• IncomeTaxRate• CorporateTaxRate• GovernmentSpending

ThepopulationofEconlandcaresabouttheirincomes,employmentprospectsandcostofliving.Inaddition,thegovernmentmustkeepitsbudgetdeficitundercontrol.Thesefactorsaremeasuredbythefollowingfourresultsareas:

• GDPgrowth• TheUnemploymentRate• TheInflationRate• BudgetSurplus(orDeficit)

Atthestartofthegame,playerschooseoneofthethreescenariosforthevolatilityoftheexternaleconomicenvironment:Basecase(averagevolatility),Rollercoaster(highvolatility)orStagnation(lowvolatility).EachScenariohasasomewhatdifferenttextdescribingtheexternaleconomicenvironment.Initially,studentsshouldchoosetheBaseCasescenario.Aftertheyhaveplayedthegameatleastonce,theycanchooseoneoftheotherscenarios,whichintroducevarietyandagreaterlevelofchallengetothesimulation.


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Afterchoosingascenario,foreachofthesevenyearsofthegame,playersgothroughthethreestepsshowninthepicturebelow.

Eachyear,playersreceiveinformationontheeconomicconditionsfacingthecountry.ThesearesummarizedintheWorldEconomicGrowthForecastandtheConsumerConfidenceIndex.Afterstudyingtheeconomicconditionsandoutlook,playersmakefoureconomicpolicydecisions.Thenplayersanalyzetheirresults,keyeconomicdata,followedbytheWorldEconomicGrowthForecastforthenextyearandtheConsumerConfidenceIndexlevel,beforemakingnewpolicydecisions.Thegamelastssevenyears.TheaimofthegameistoobtaintheapprovalofthecitizensbymaximizingRealGDPGrowth,whilekeepingtheUnemploymentRateandtheBudgetDeficitaslowaspossible.Inflationalsoneedstobelow,butshouldremainpositive.NegativeInflation(Deflation)isdestabilizingforaneconomy.Everyround,0,10or25'approvalpoints'aregivenforeachofthefourresultsareas.Theapprovalpointsaregivenaccordingtothetablebelow.


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Takentogether,theapprovalpointsforeachRoundmakeuptheoverallapprovalrating(0-100points),whichrepresentstheproportionofthecountry’spopulationthatapprovesofthechoseneconomicpolicies.TheoverallobjectiveofthegameistoendupwiththehighestpossibleAverageApprovalRatingattheendofYear7.TheDashboardpageprovidesasummaryoftheresultsobtainedandgivesfeedbackontheplayer’sdecisionsandresults.PlayersneedtotakethesefeedbackcommentsintoaccountbeforemakingdecisionsforthenextRound.TheReportspageprovidesimportantinsightsintothefunctioningoftheeconomy,includingdataonthecomponentsofGDP,productivityandtheexchangerate.AnalyzingthedataintheReportssectioniskeytomakingwellinformeddecisionsinfutureRounds.Whenthegameisfinished,theViewPreviousRunspageshowsthegameresultrankedagainstanyotherpreviousgamesplayed.


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4. OverviewofScreensTherearefivemainpagesinEconland.Playerscannavigatefromonepagetoanotheratanytimebyclickingthenavigationbuttonsontopofthescreen.1. GameInfo:TheGameInfopageexplainstheobjectivesandrulesofthegame.2. Decisions:Playersreviewtheeconomicoutlookforthenextyear.Theoutlookconsists

ofadescriptionofglobaleconomicconditions,aWorldEconomicGrowthForecastandtheConsumerConfidenceIndex.Itissummarizedina‘weatherforecast’picturewhichrangesfromsunny,partlycloudy,cloudytorainy.Afterreviewingtheirpreviousyear’sresultsandtheeconomicconditionsandoutlook,studentsmakefourMonetaryandFiscalPolicydecisions(InterestRate,IncomeTaxRate,CorporateTaxRate,GovernmentExpenditure).

Studentscanseehoweachoftheirdecisionsaffectsdifferentvariablesinthesimulationmodelbyreadingthetooltipsthatarevisiblewhenhoveringthecursoroveradecisionarea,asshownbelow.


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3. Dashboard:Showsresultsalongthefourresultsareas(GDPGrowth,Unemployment,

Inflation,BudgetDeficit)aswellaswrittenfeedbackprovidedbythePolicyAdvisorbasedontheplayer’sdecisionsandresults.Thesmileysforeachresultsareashowwhethertheplayerobtained0,10or25pointsfortheyear.Thegraphshowstheapprovalratingforeachyearofthegameandtheaverageapprovalratingforthedurationofthegameisshownasanumber.


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4. Reports:TheReportssectionincludesthreetables(seenextpage):

- Table1:RealGDPanditscomponents.AbreakdownofGDPintoitscomponents

(Consumption,GovernmentExpenditure,Investment,ImportsandExports).ThetotallevelofGDPisprovidedinbothNominalandRealterms.

- Table2:OtherMacroeconomicdata.Containsdataonintermediaryvariablesthathelpstudentsunderstandtheresultstheyobtain.

- Table3:Economicenvironment,DecisionsandResults.Includesdataontheworldeconomicgrowthforecast,decisionstakenbytheplayerandresultsobtainedforalltheroundplayed.


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5. Macroeconomics:TheMacroeconomicstabcontainsaccesstoarangeoflearningmaterialsandtools.ThesearedescribedinSection5below.

5. MacroeconomicsLearningSectionTheMacroeconomicssectioncontainsseveraleducationalresourcesthatsupportstudentsinlearningabouttheMacroeconomicconceptspracticedinthesimulationgameandbeyond.TheMacroeconomicssectionisdividedintothreesections.1. OverviewTheOverviewpagecontainsabriefdescriptionoftheMacroeconomictheorypracticedinthesimulationgame.ItcontainsanoutlineofMonetaryandFiscalPolicy,theAggregateDemandandAggregateSupplymodel,aswellastheobjectivesofeconomicpolicyinthegame(GDPgrowth,Unemployment,Inflation,BudgetDeficit).2. GlossaryTheGlossarypageincludesanexplanationofalltheeconomictermsandconceptsusedinEconland.ThetermsareexplainedinsuchawaythattheyarerelevantforboththepurposeofplayingtheEconlandsimulationgameandforaMacroeconomicscourse.TheGlossarysectioninEconlandisprovidedintheAppendix.3. ResourcesTheResourcessectionconsistsoffourtypesofresourcesthatsupportstudentsinthelearningofMacroeconomics:

1. Videos:ContainsdirectlinkstoinstructionalvideosabouttheMacroeconomics

topicscoveredinEconland.

2. EconlandNews:AnewsletterthatbringstherealworldintothestudyofEconomics

withtheweek'smostinterestingEconomicsnewsstories.EacharticleillustratescurrentapplicationsoftopicscoveredinEconomicscoursesofalllevels.EconlandNewsppearseveryFridayandissenttosubscribersautomaticallyandfreeofcharge.


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3. Forum:Amoderateddiscussionforumwherestudentscanaskquestionsandfind

answersoneverythingrelatedtothestudyofEconomics.

4. Quiz:AtestbankofMultipleChoiceQuestionsonMacroeconomicsthatpracticethe

conceptsusedinEconland.QuestionsareataleveltypicallyfoundinIntroductoryMacroeconomicscoursesatCollege/Universitylevel.Eachtimethestudenttakesthetest,tenquestionsaretakenatrandomfromthetestbank.Aftercompletingthetest,studentsgettheirscoreandabriefexplanationoftheanswertoeachquestion.

6. TechnicalRequirements

Econlandfunctionsonpersonalcomputers(WindowsandMacOS)aswellastabletsandsmartphones.Econlandworksonallcommonbrowsers.Beginningplayersareadvisedtostartonacomputerortabletinordertohavefullviewofthefunctionalitiesonoffer.PeoplewithsomeexperienceofEconlandwillbeabletousetheEconlandonsmartphones.


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APPENDIX:GlossaryTheGlossary(availableinEconlandundertheMacroeconomicstab)explainsthekeyconceptsusedinthesimulationgameinawaythatisrelevanttoboththegameandastandardMacroeconomicscourse.BudgetSurplus(Deficit):Thedifferencebetweengovernmentrevenues(ascollectedthroughincometaxesandcorporatetaxes)andgovernmentexpenditure.TheBudgetSurplusorDeficitisusuallyexpressedasapercentageofGDP.ConsumerConfidenceIndex:Ameasureofhowoptimisticconsumersfeelaboutthestateoftheeconomy.Anindexscoreof100indicatesconsumersarefeelingneutralabouttheeconomy.Thehigherthescore,themoreoptimistictheyare.ConsumerPriceIndex:Ameasureofthecostofatypicalbasketofgoodsboughtbyaconsumer.Theindexissetatavalueof100inthebaseyearandisrecalculatedeachyearbasedontheexistingpricesforthesamebasketofgoods.CorporateTaxRate:Thepercentageofprofitsthatfirmsneedtopayastaxtothegovernment.Deflation:Deflationoccurswhentheinflationrateisnegativeandtheaveragepricelevelinaneconomyisfalling.Deflationcanencourageconsumerstopostponetheirconsumptioninanticipationoflowerpricesandcanleadtoasevererecession.ExchangeRateIndex:Thevalueofthecountry'scurrencyagainstabasketofothercurrencies,withtheIndexsetatavalueof100inthebaseyear.IfthevalueofthisIndexincreases,thevalueofthecountry'scurrencyhasgoneup(appreciated).Conversely,ifthevalueoftheindexdecreases,thevalueofthecountry'scurrencyhasdecreased(depreciated).FiscalPolicy:FiscalPolicyincludesthegovernment'sdecisionswithrespecttoGovernmentExpenditureandTaxation.InEconland,thegovernmentdecidesonthetotallevelofGovernmentExpenditure,theIncomeTaxRateandtheCorporateTaxRate.GovernmentSpendingMultiplier:Whenthegovernmentincreasesitsexpenditure,thepeopleorbusinesseswhoreceivetheadditionalexpenditurewillspendapartofthisadditionalincomewhichinturnincreasestheincomeofotheractorsintheeconomy,andsoon.Therefore,GDPincreasesbymorethantheoriginalincreaseinexpenditure.Thisisreferredtoasthemultipliereffect.Howbigthemultiplierisremainsopentodebate.Generally,economistsagreethatthemultipliereffectislargerwhenthereisexcesscapacityinaneconomy(e.g.unemployment).Withoutexcesscapacity,increasedgovernmentexpendituremayjustbe'crowdingout'privateinvestment.GrossDomesticProduct(GDP):Themarketvalueofallgoodsandservicesproducedwithinacountryinagivenperiodoftime.ThecomponentsofGDPareConsumption+Investment+GovernmentExpenditure+NetExports.NetExportsconsistsofExports–Imports.IncomeTaxMultiplier:TheIncometaxmultiplierworksinasimilarwayasthegovernmentspendingmultiplier,exceptthatitresultsfromchangesinthelevelofincometaxratherthaningovernmentexpenditure.Reductionsinincometaxcanleadtoincreasesinconsumerexpenditurethatare


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greaterthanjusttheadditionaldisposableincomeasaresultofthetaxcut.Thisisbecauseconsumerswillspendmostoftheadditionalincomeongoodsandservices.Therecipientsofthisexpenditurewillinturnspendmostofit,leadingtoamultipliereffectthatissimilartothegovernmentexpendituremultiplier.IncomeTaxRate:Thepercentageoftheirearnedincomethatcitizensofacountryneedtopayastaxtothegovernment.IncomeTaxisseparatefromSalesTax(alsocalledValueAddedTax),whichisataxonconsumption.SalesTaxisnotincludedasanelementintheEconlandgame.Inflation:Thepercentagechangeinpricelevelfromoneyeartothenext,asmeasuredbythechangeintheConsumerPriceIndexInterestRate:IntheEconlandsimulationgame,theinterestratereferstothediscountratesetbytheCentralBank.ItistheonlyinstrumentofMonetaryPolicyavailableinthegame.Lowinterestratesstimulateinvestment,consumptionandexports(throughadepreciationoftheexchangerate),buttheycanleadtoinflationiftheeconomyisclosetooperatingatfullemployment.InternationalMonetaryFund(IMF):TheIMFisamultilateralorganizationwithitsstatedobjectivesbeing"tofosterglobalmonetarycooperation,securefinancialstability,facilitateinternationaltrade,promotehighemploymentandsustainableeconomicgrowth,andreducepovertyaroundtheworld."TheIMF'sactivitiesincludeprovidingeconomicpolicyadvicetogovernmentsandproducingeconomicanalysesandforecastsforeverymembercountry.MonetaryPolicy:MonetaryPolicyreferstotheactionstakentomanagetheMoneySupply.MonetaryPolicyistheresponsibilityofacountry'sCentralBank(calledtheFederalReserveintheUnitedStates).Intherealworld,MonetaryPolicydecisionscanincludesettingtheInterestRate(DiscountRate),buyingorsellingGovernmentBondsbyconductingOpenMarketOperationsandsettingtheReserveRatiorequirementforcommercialbanks.Forsimplicity,inEconlandtheonlyMonetaryPolicydecisiontomakeistheleveloftheInterestRate.Productivity:Thequantityofgoodsandservicesproducedforeachunitoflaborinput.Productivityisthemaindeterminantofstandardsoflivinginacountry.Inthegame,productivitycanbeincreasedthroughinvestmentinthecountry’scapitalstock,whichinturnispromotedthroughlowinterestratesandlowcorporatetaxrates.RealGDP:TheGDPofacountryaftertakingintoaccounttheeffectsofInflation.RealGDPisusuallymeasuredastheGDPatconstantprices,wherethepricelevelisfixedatthelevelofacertainbaseyear.Unemploymentrate:Thepercentageofthelaborforcethatisnotemployedandisactivelylookingforwork.Thelaborforceconsistsofallpeoplewhoareeitherworkingorwhoareactivelylookingforwork.

econland student guide 11 march 2018 · materials and tools. these are described in section 5...

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