Step 1: Understand the Requirements
The assignment revolves around applying monetary and fiscal policies in the Econland simulation game. You’ll analyze the results of your decisions and relate them to macroeconomic concepts such as aggregate demand (AD) and aggregate supply (AS).
Please follow the following report structure. I wish you all the best!
General rules:
1. Irrespective of what Forum instructions say, below is the FIXED structure your report should have
2. Word count is not overly critical. Do not go overboard and over-explain or repeat yourself.
You need to adequately answer the questions as outlined below.
3. You can play the game as many times as you need. You need to gather enough evidence to answer
all the questions properly.
4. All questions are to be answered using the Base case scenario. You are not expected to play
Rollercoaster or Stagnation.
5. Always change only ONE policy at a time.
6. All screenshots should be clear and show the complete decision screen and complete result screen.
7. There must be a match between the two screenshots. Please do not try to cheat or make up
results.
8. You will be judged/graded on your analytical approach, level of understanding, and the quality of
explanations and not on ‘How well you do’ or the ‘Approval rating’ in the game. So, there is no use
of cheating or modifying the screenshots.
Expected Report Structure:
A. Introduction
B. Application of Econland to address macroeconomic policy questions
1. Do you expect any differences in the effect on the economy of corporate and income taxes? Why
or why not? Which one affects aggregate demand, and which one affects aggregate supply?
– Find some literature/articles to substantiate your answer
– Provide explanation in your own words
– The answer to this question will serve as a guide for your choice of fiscal policies to answer the
rest of the questions.
2. How do you better control inflation: through monetary policy, or through fiscal policy? Why do
you think this is the case?
– Test monetary policy
– Explain what decision you will take and why using AD-AS graph
– screenshot of your decision
– screenshot of result
– Briefly discuss if the result was as expected
– Test Fiscal policy
– Explain what decision you will take and why using AD-AS graph
– screenshot of your decision
– screenshot of result
– Briefly discuss if the result was as expected
– Compare the two results. Comment on which one was more effective and why?
3. Which policy has a stronger effect on growth: monetary policy or fiscal policy? Why do you think
this is the case? Which fiscal instrument(s) have a stronger effect compared to others? Are those
results in line with your expectations? (200 words).
– Test monetary policy
– Explain what decision you will take and why using AD-AS graph
– screenshot of your decision
– screenshot of result
– Briefly discuss if the result was as expected
– Test Fiscal policy
– Explain what decision you will take and why using AD-AS graph. Focus on which fiscal
instrument you will use.
– screenshot of your decision
– screenshot of result
– Briefly discuss if the result was as expected
– Compare the two results. Comment on which one was more effective and why?
4. When you want to consolidate the budget, which one is more effective: cutting expenditures or
increasing taxes? Is this what you expected? (200 words).
– Test cutting expenditure
– Explain what decision you will take and why
– screenshot of your decision
– screenshot of result
– Explain why you got that result
– Test increasing taxes
– Explain what decision you will take and why. Focus on which fiscal instrument you will use.
– screenshot of your decision
– screenshot of result
– Explain why you got that result
– Compare the two results. Comment on which one was more effective and why? For the why you
may need to substantiate with some literature.
C. Reflection and Conclusion
Reflection: Do you have any additional insights? If you were the Minister of Economy, which policies
would you recommend and why? (200 words).
Summary of all the different options you tried and what would you recommend in terms of policy.