My dissertation is basically an economic model of how a progressive government can stimulate the economy. In doing so, it should increase economic growth and employment. How can I best study this? I decided to use an economic simulator to aid my research.
I loaded up the game and started playing. I’ve been known to snack on chips and sodas during office hours, so I knew I’d have to limit myself to baked goods during the week, if I wanted to see real results from my economic simulation exercise. I was expecting this, since most economic games are rather silly. But surprisingly, even though I ate only small portions throughout the game, I still managed to rack up some real calories.
I soon found out that the simulator wasn’t actually a game — it was a simulator designed by a PhD candidate in Economic History to see how various economic policies would affect the economy. It’s a bit different than a game of Monopoly, but it’s also highly engaging. Like any good economic textbook, it asks lots of questions. And, unlike many university classes where you are required to read an entire chapter before answering a question, in this case you are given multiple choice answers until you reach a correct answer.
For example, one policy option asked me to choose between increasing spending at the Federal level or decreasing tax revenue at the Federal level. My first choice was the former, since I care about economic growth. My second choice was the latter, because reducing spending and increasing taxes were economically harmful. In this case, the economic growth went on to grow very rapidly, resulting in a deficit blowout. My policy adopted a balanced approach.
Another policy option asked me to choose between increasing infrastructure spending at the Federal level or increasing taxes. Again, my first choice was the former, since infrastructure projects are generally good for economic development. My second choice was the latter, because raising taxes was economically damaging. It resulted in a large trade deficit, which hurt our overall economic performance. But because the Federal government took over the management of the economic stimulus package, it is now enjoying extremely low interest rates and has other tools available to it to stimulate the economy.
My third alternative was to take my nation’s politics and markets quiz for me and you and answer all the questions. In this case, since the economic policies implemented so far are not working, it made little sense to take my nation’s politics and markets quiz for me and you today. Since you are smarter than me, you will find the answers to all the questions more enlightening. And if you are smart enough to understand the questions, it makes no difference whether you take my nation’s politics and markets quiz for yourself or whether you take the advice of a professional.
A good way to check your knowledge before taking the quiz is to first think about the questions that you expect to see on it. For example, one of the questions may ask you to predict whether the Federal Reserve will raise interest rates again this year or this month. This sounds like an easy question to answer given the current state of the economy, but the recent history shows that interest rate increases are reserved for a very few very important reasons. Unless inflation forces the fed to hike rates, which is highly unlikely, we are likely just to see a small rise in base interest rates. So you have some homework to do before you take my nation’s politics and markets quiz for me and you can easily find out which economic indicators are correct and which ones are incorrect.