Make Decisions Informed by Macroeconomic Principles and the Business Cycle

• Determine the economic impact of historical and current events using models of macroeconomics.
• Assess how changes to macroeconomic policies impact the economy.

Scenario

You have just completed your seven-year term as the chief economic policy advisor for Econland, the nation you have been helping to manage. Now, you are expected to write a report for the new administration. In this report, you will summarize your macroeconomic policy decisions and explain the economic outcomes for Econland. The purpose of this report is to share the lessons you’ve learned during your term and promote sound macroeconomic decision-making moving forward.

Instructions

First, gather the necessary materials to complete this assignment:

1. Access the Macroeconomics Simulation: Econland from Harvard Business Publishing. Select either the Rollercoaster or Stagnation scenario. Once you complete the final year of your seven-year term, view the final reports under the Dashboard and Reports tabs at the top of the webpage. Use these charts, graphs, and other visualizations in your report where indicated (e.g., Table 1). Contact your instructor if you have any questions about accessing these resources.

2. Review and use the Project Template located in the "What to Submit" section.

   • The cover page, table of contents, and introduction section should remain standard in all submissions except where specified in the template.
   • Add the high-level descriptions where prompted in the introduction section of the template.

3. Replace the placeholders in the template with the appropriate images from the simulation data (e.g., charts, graphs, and tables). Use a snipping tool or other image-editing software to copy and paste the visualizations into the template. Tutorials in the "Supporting Materials" section can guide you.

4. Reference any sources in your report using APA formatting. The references page in the template already includes the citation for the textbook. Add any additional references as needed.

Directions

Draft your economic summary report by following these steps:

Introduction

Add details about your seven-year term as the chief economic policy advisor for Econland. Follow the instructions in the template, including:

• Insert Table 3 from your simulation report into the template (as Table 1).
• Add a two- to three-sentence summary of your chosen scenario, overall performance, and approval rating.

Fiscal Policies: Taxation

In the “Fiscal Policies: Taxation” section, discuss taxation policies for Econland:

• Insert an image of Table 1 from your simulation report into the template (as Table 2).
• Address the following:
  1. Explain your intent behind your taxation policy decisions over the seven-year term. What macroeconomic principles or models influenced your decisions?
  2. Identify the impacts of changes in income and corporate tax rates. How did these changes affect consumption and investment? Explain using specific macroeconomic principles.
  3. Compare the impact of your tax policy decisions to historical or current U.S. examples. What do these comparisons reveal about the validity of macroeconomic models? Cite sources appropriately.

Fiscal Policies: Government Expenditure

Discuss Econland’s government spending policies in this section:

• Add images of the “Real GDP Growth” and “Unemployment Rate” graphs from the simulation results to the template (as Figures 1 and 2).
• Use an aggregate demand and aggregate supply (AD/AS) model to support your analysis.
• Address the following:
  1. Explain your decision-making regarding government expenditure based on macroeconomic conditions. What were the goals of your fiscal policy decisions?
  2. Evaluate the impact of your fiscal policies on key macroeconomic factors, such as real GDP growth and unemployment. To what extent did your policies yield positive or negative outcomes?
  3. Refer to the AD/AS model in your evaluation.

Monetary Policies

In the “Monetary Policies” section, discuss monetary policies:

• Add an image of the “Inflation Rate” graph from your simulation report to the template (as Figure 3).
• Address the following:
  1. Explain how changes to interest rates impacted macroeconomic factors like inflation, consumption, investment, GDP, and foreign trade. Provide examples.
  2. Compare the effects of your monetary policies to historical or current U.S. examples. Cite appropriately.

Global Context

Analyze the wider global context:

• Discuss the impacts of openness to trade.
• Explain how the effects of monetary and fiscal policies differ in closed versus open economies. Support claims with details from the course material.

Conclusions

Summarize key findings and lessons learned:

1. Assess the effectiveness of your economic policies. Did they produce the anticipated results? Were the macroeconomic principles and models reliable? Provide examples.
2. Evaluate the influence of consumer confidence on your policy outcomes in Econland. Why is consumer confidence a vital factor in informed macroeconomic decision-making?