For this discussion, play your second run of the Macroeconomics Simulation: Econland (from Harvard Business Publishing), in which you act as a the chief economic policy advisor for the fictional country of Econland. Select either the Rollercoaster or Stagnation scenario option. You may play the simulation as many times as you like. This will directly support your success in your course project, due in Module Eight.
In your initial post, include an image of your simulation report. (See Module Seven Simulation Discussion Screenshot Instructions PDF.) Then address the following:
Share your experience in the simulation. In your opinion, which policy decisions were more successful and why?
Why does the simulation provide you with a global economic outlook for each year? How does an open economy versus a closed economy impact government policy decisions? Use information from the textbook or the news to support your answer.
At the end of each year, the simulation highlights changes in consumer confidence. Why is the economic indicator “consumer sentiment” relevant for making successful policy decisions? Use news sources to support your answer.
In your responses, comment on at least two posts from your peers, and compare and contrast your simulation experience and analysis. Refer to the textbook to support your decisions and your claims related to open economies and consumer confidence.
I attached the game for this discussion
peer 1) It’s good to see that the citizens of Econoland are grumpy no matter which version of the simulation you play through! I played through the Rollercoaster version, and I actually found it easier to manage the different factors that in the first playthrough. I failed miserably in keeping my budget under control, but my unemployment was more or less constant as was my GDP after the second year. Years 2 and 3 saw inflation spike but for the most part, it also stayed in the same general range. I found the Government spending criteria the most difficult to pin down. When I would raise the amount by what I believed would keep pace with inflation or reduce the deficit, the game would tell me that the increase was unrealistic, but if I kept it to a smaller amount, my wrap up report for the year said I was not increasing it enough to off set inflation.
The global economic outlook for each year is important since the simulation assumes an open economy that will interact with the rest of the world. Economic advisors look at global performance and factors like interest rates when making decisions and long-term plans. It also allows for a general gauge of the health of the global economy since in an open economy, each country is dependent on each other to a certain extent (Principle 5: Trade can make everyone better off.). (Mankiw, 2021) The global economic outlook is also a good tool to alert policy makers to any potential economic issues in the world. For example, civil unrest in the Middle East has the potential to affect oil prices so being aware of the geo-political situation helps to make informed policy decisions.
Consumer sentiment can be a tricky thing. Frequently, the people making economic decisions are elected officials and if consumers are pessimistic about the way the economy is trending, there is a good chance that voters will decide that they shouldn’t keep making those decisions at election time. The current US economy is a good example. In 2022 inflation reached the highest levels in a long time. Recent reports have shown that traditional data points that are used to measure the economy are generally improving month over month.(Radcliffe, 2024) However, the public is still unhappy with the state of the economy. This article from ABC News posits that it isn’t that people aren’t aware of the traditional factors but more that they have different priorities after the COVID 19 pandemic. Their research found that people are less concerned about the state of the GDP and more concerned with things that affect their day to day lives, like gas prices, median household income, food and energy costs (which have both been stubbornly high in the last few years). (Radcliffe, 2024)
It’s worth noting that while traditional measures of economic health are important, examining how we think about them and how people relate to them is also vital. We were all isolated to varying degrees during COVID and that changed our relationships with money and with each other. People are increasingly thinking about things that large corporations have allowed us to assume is normal (i.e. Intuit/TurboTax charges for tax preparation, but you can file for free at the IRS website and there are community groups that will assist for a nominal fee or for free). It remains to be seen how the current economic situation will resolve but one thing that is clear, we need to rethink how we assess and communicate about the economy.
Mankiw, N.G. (2021). Principles of Economics (9th Edition). Cengage Learning
Radcliffe, M., Potts, M., & Rogers, K. (2024, June 18) It’s not just vibes. Americans’ perception of the economy has completely changed. Abcnews.com. https://abcnews.go.com/538/vibes-americans-perception-economy-completely-changed/story?id=111211869
peer )
It’s good to see that the citizens of Econoland are grumpy no matter which version of the simulation you play through! I played through the Rollercoaster version, and I actually found it easier to manage the different factors that in the first playthrough. I failed miserably in keeping my budget under control, but my unemployment was more or less constant as was my GDP after the second year. Years 2 and 3 saw inflation spike but for the most part, it also stayed in the same general range. I found the Government spending criteria the most difficult to pin down. When I would raise the amount by what I believed would keep pace with inflation or reduce the deficit, the game would tell me that the increase was unrealistic, but if I kept it to a smaller amount, my wrap up report for the year said I was not increasing it enough to off set inflation.
The global economic outlook for each year is important since the simulation assumes an open economy that will interact with the rest of the world. Economic advisors look at global performance and factors like interest rates when making decisions and long-term plans. It also allows for a general gauge of the health of the global economy since in an open economy, each country is dependent on each other to a certain extent (Principle 5: Trade can make everyone better off.). (Mankiw, 2021) The global economic outlook is also a good tool to alert policy makers to any potential economic issues in the world. For example, civil unrest in the Middle East has the potential to affect oil prices so being aware of the geo-political situation helps to make informed policy decisions.
Consumer sentiment can be a tricky thing. Frequently, the people making economic decisions are elected officials and if consumers are pessimistic about the way the economy is trending, there is a good chance that voters will decide that they shouldn’t keep making those decisions at election time. The current US economy is a good example. In 2022 inflation reached the highest levels in a long time. Recent reports have shown that traditional data points that are used to measure the economy are generally improving month over month.(Radcliffe, 2024) However, the public is still unhappy with the state of the economy. This article from ABC News posits that it isn’t that people aren’t aware of the traditional factors but more that they have different priorities after the COVID 19 pandemic. Their research found that people are less concerned about the state of the GDP and more concerned with things that affect their day to day lives, like gas prices, median household income, food and energy costs (which have both been stubbornly high in the last few years). (Radcliffe, 2024)
It’s worth noting that while traditional measures of economic health are important, examining how we think about them and how people relate to them is also vital. We were all isolated to varying degrees during COVID and that changed our relationships with money and with each other. People are increasingly thinking about things that large corporations have allowed us to assume is normal (i.e. Intuit/TurboTax charges for tax preparation, but you can file for free at the IRS website and there are community groups that will assist for a nominal fee or for free). It remains to be seen how the current economic situation will resolve but one thing that is clear, we need to rethink how we assess and communicate about the economy.
Mankiw, N.G. (2021). Principles of Economics (9th Edition). Cengage Learning
Radcliffe, M., Potts, M., & Rogers, K. (2024, June 18) It’s not just vibes. Americans’ perception of the economy has completely changed. Abcnews.com. https://abcnews.go.com/538/vibes-americans-perception-economy-completely-changed/story?id=111211869
