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SIMULATION DISCUSSION-ECONLAND

Simulation discussion-Econland

Name:

Institution:
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SIMULATION DISCUSSION-ECONLAND

Having played the simulation thrice, I settled for the rollercoaster option which is

characterized by extreme up and down changes in the economy. I figured out that drastic

changes will impact negatively to our economy. The best option was to do things gradually. I

would increase to grow the GDP, I would lower the interest rates. For popularity, I’d lower

the income tax, even with a single-digit to win the loyalty of the people. Debts were kept in

check by adjustment on the corporate tax.

The simulation provides a global economic outlook for each year to help us

understand how benefitting one area of results may lower performance in another. The trend

can be used to forecast the future economy. It allows one to watch how different economic

sectors contribute to building the economy. Factors such as unemployment impact negatively

on the economy. From the simulations also, I deduce that exports built the foreign exchange

as more income was being generated into the country. More so, the simulation highlights

changes in consumer confidence at the end of each year.

Both open and closed economies affect government policy decision-making.

(Investopedia, 2020) An open market is an economic system promoting free-market activity

through giving a conducive environment by softening regulations in tariffs, licensing, taxes,

and giving subsidies. On the other hand, a closed economy does not trade with outside

economies (Investopedia, 2020). It is entirely self-sufficient, with neither imports nor exports.

Domestic consumers get their supplies from within the country's borders. Consumer sentiment

is an economic indicator. (Yahoo, 2014). It measures the confidence consumers have in the

overall state of the economy. Their confidence, or sentiments for that matter, affect their
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SIMULATION DISCUSSION-ECONLAND

economic decisions. As such, consumer sentiments are an indicator of the shape of the

economy useful for making successful policy decisions.

Open economies promote consumer confidence as they have a wide range of products

to pick from considering imports are allowed into the market. On the contrary, closed

economies lower consumer confidence as they are forced to settle on only products produced

locally limiting their choices.

Classmate’s Responses

Classmate 1

Stefanie, I agree with you on reasons as to why the rollercoaster option is viable. I

keenly paid attention to your initial response. Your discussion is commendable as you even

went further to list countries with open and closed economies. Nevertheless, I don’t see how

governments will reduce taxation rates just to get people happy. If they do this, how will they

raise revenue to serve their people?

Classmate 2

To my 2nd classmate, you and I share some analyses as you also mentioned that a

country’s foreign debt should be kept on the low or avoided as well. However, I beg to differ

with you on how you perceive popularity. Can you kindly expound on your view on

popularity and corporate tax? How do they relate?

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SIMULATION DISCUSSION-ECONLAND

REFERENCES

Investopedia (2020). Learn more about the concept of an open market)

Investopedia (2020). Closed economies and why they don’t exist.

Yahoo! Finance (2014). Why consumer confidence is an important economic indicator