Teachers' 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 and to help prompt discussion.

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 students should then go on to the report / issues section that considers the effects of the policies on their family / business / government.

The case studies could either be used as worksheets that students do (either individually or in groups), which they then hand in or make a presentation about or they could simply be used as a basis for discussion.

Element 1.3 requires students to "explain ways governments can influence markets" and "evaluate the effects on markets of government policies". Students can explore the impact of each tax on GDP growth and employment opportunities. They can also look for the effects on incomes of different types of households. This can 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. Students can examine the impact of interest rate changes on output and inflation. They can explore the way low interest rates foster growth, which may also increase competitiveness. Equally they can see how high interest rates might reduce aggregate demand and economic activity. GNVQ students often find the terminology of fiscal and monetary policy rather daunting. By getting involved in the decision taking process they will have the chance to think in depth in a supportive environment which will aid comprehension. They can refer to the glossary for help with jargon, playing with the possibilities and gradually absorbing the complicated reality.