Chancellor's Office

Welcome to the Chancellor's office in the Virtual Economy. The Virtual Economy is based on the model of the economy used by the Treasury and you can use it to experiment and see if you can run the economy better than the Chancellor.

In running the economy, you need to try to look carefully at what happens to the main economic targets. The four key targets are:

1. Low inflation
2. Low level of unemployment
3. A high and stable level of economic growth
4. External balance between imports and exports

However, as you try to do this, you will find that there are trade-offs. As one of these targets gets better, another will often get worse. You will have to make decisions about which are most important. For more details on each of these, why not go to the outcomes section on the Economic Policy floor (the 2nd floor)?

You may also want to see the effects that different policy tools have on the economy. The main policy tools at your disposal are:

1. Income tax (rates and allowances)
2. VAT and other indirect taxes
3. Government expenditure
4. Interest rate
5. Benefits

There are also full details on each of these in the policy tools room on the Economic Policy floor (the 2nd floor). There are explanations of each and theories relevant to them, as well as worksheets to help you see the effects.

You might want to get some advice to help you by using the advisers' room on the Economic Policy floor (the 2nd floor). You could also use the Library (the 3rd floor) to do some research on different economists and the policies they recommended, or to find out about economic theory or simply to look up some economic jargon in the glossary.

Above all, we hope you enjoy finding out what makes the economy tick. When you find out, let us know!