Students' Guide - Using the Virtual Economy for GNVQ Business

The main use of the Virtual Economy for GNVQ Business will be in Element 1.3 - "Examine the effects of government policies on markets". It will also be of value in the study of Element 5.3 - 'Examine the competitiveness of UK industry'. The model (4th floor) can be used on its own to help to see the impact of different policies on the economy but there are various resources in the Virtual Economy to help you focus this work.

The most useful section should be the case studies section. There are three main case studies:

1. People
2. Business
3. Government

Each case study has three sections to it. The first section sets up a series of scenarios - different types of firm, different families or different governments. The second section then suggests different policies that could be tried out on the Virtual Economy. Having chosen a scenario and a policy you can then go on to the report / issues section that considers the effects of the policies on their family / business / government.

Element 1.3 requires you to 'explain ways governments can influence markets' and 'evaluate the effects on markets of government policies'. You can use the model to explore the impact of each tax on GDP growth and employment opportunities. You can also look for the effects on incomes of different types of households. This could lead to an assessment of the effects of specific taxes on particular market segments.

Element 5.3 calls for description and evaluation of government strategies to improve competitiveness. You could examine the impact of interest rate changes on output and inflation. You could try reducing interest rates to increase growth, which may also increase competitiveness. Equally you could see how high interest rates might reduce aggregate demand and economic activity. The terminology of fiscal and monetary policy is rather daunting and so are many other areas of economic jargon. However, you can always refer to the glossary for help with jargon, playing with the possibilities and gradually absorbing the complicated reality.