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Economic Issues and Principles

S i m E c o n ®. Economic Issues and Principles. Dismal Science Software®. Develop an interactive instructional tool Add value to economic education Improve student learning Attract students to economics Increase instructional access. Goals of S i m E c o n ®. S i m E c o n ® Modules.

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Economic Issues and Principles

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  1. SimEcon® Economic Issues and Principles Dismal Science Software®

  2. Develop an interactive instructional tool Add value to economic education Improve student learning Attract students to economics Increase instructional access Goals of SimEcon®

  3. SimEcon® Modules

  4. SimEcon® Design and Operation • Operates with a graphical interface • Runs on Microsoft Windows • Uses object-based programming features • Contains initial conditions for each module • Provides tabular and/or graphical results

  5. SimEcon® Uses • Individual student assignments • Group lab or activity sessions • Distance-learning modules • On-line course assignments

  6. Markets Module Shows how markets work. You change supply or demand factors and observe the effects on market equilibrium. You may also regulate the market with price or quantity controls and review the results.

  7. Markets Module • Initial Conditions • Demand • Income • Butter Price • Corn Price • Supply • Rainfall • # of Farms • Seed Cost • Initial Equilibrium • Price • Quantity • Regulate Market • Control Price • Price Ceiling • Price Floor • Control Production • Disturb Market • Demand • Supply • Results • New Equilibrium Price and Quantity • Results • With Regulation • Without Regulation

  8. Competition Module Shows how a competitive firm determines its price and output. You select the quantity of output that maximizes short run profits as price and costs change and see the results.

  9. CompetitionModule • Short Run Costs • Marginal Cost • Average Cost • Firm Results • Price • Costs • Profit Margin • Total Profit • Equity • Set Firm Output • Current Market Price Provided • Set Output Level • Expert Analysis • Evaluation of Output Decision

  10. Monopoly Module Shows how a monopolist maximizes long run profits as its costs and output change. You may also regulate it by breaking up the monopoly and/or applying marginal or average cost pricing policies.

  11. Monopoly Module • Initial Conditions • Total Output • Total Fixed Cost • Total Revenue • Total Cost • Total Profit • Total Equity • Price • Marginal Revenue • Marginal Cost • Average Total Cost • Choice • Variables • Total Fixed Cost • Output • Regulate Monopoly • Number of Firms • Price • Results of Regulation for • Pure Monopoly Pricing • Average Cost Pricing • Marginal Cost Pricing • Total Cost • Average Cost • Price • Industry Output • Profit • Output Results • New Equilibrium • Price and Quantity

  12. Labor Module Shows the impacts of labor market disturbances on labor market equilibrium. You can see how discrimination affects the employment and wages of workers who were discriminated against and those who were not. You can also try to reduce the burden of discrimination on its victims.

  13. Labor Module • Initial Conditions • Demand • Price of Bread • Oven Cost • Price of Flour • Supply • Population • Participation Rate • Cook’s Wage Rate • Initial Equilibrium • Price • Quantity • Discriminate • Control discrimination among Pildians • Big Pildians • Little Pildians • Disturb Market • Demand • Supply • Results • New Equilibrium Price and Quantity • Results • With Discrimination • Without Discrimination

  14. UtilityMax Module Shows how a consumer maximizes utility with a limited income. You choose quantities of two goods depending on the consumer’s preferences, prices, and income, and see the results. Income and substitution effects are reported for price and income changes.

  15. UtilityMaxModule • Initial Conditions • Price of Beer • Price of CDs • Consumer’s Income • Set Preferences • Preference A • Preference B • Select Quantities • Beer • CDs • Consumer Results • Total Utility • Marginal Rate of Substitution • Maximum Possible Utility • Change Budget • Price of Beer • Price of CDs • Consumer’s Income • New Consumer Results • New Maximum Utility • Income and Substitution Effects

  16. CostMin Module Shows how a firm arranges its production process so as to minimize the total costs of its product. You choose the number of variable inputs and the technology the firm adopts and view the results of the firm’s output and production costs.

  17. CostMin Module • Select Inputs • Select Number of Variable Inputs • Select Technology • Production Results • Output • Total Cost • Average Cost • Marginal Costs • Marginal Products • MRS • Graphs • Isocost / Isoquant • Long Run Average Cost / Marginal Cost

  18. GasStations Module Shows how a monopolistically-competitive firm operates. You manage the firm so as to maximize short-run profits by selecting a location and price of gasoline and see the results over several months of service.

  19. GasStationsModule • Initial Conditions • Rent at Location 1 • Rent at Location 2 • Current Price of Gas • Set Preferences • Location 1 or 2 Select Gas Price • Operation Results • Gallons Sold • Total Revenue • Total Cost • Station Rent Increase • Change Location • Executive Summary • Months in Operation • Total Profits • Total Gallons Sold • Average $/Gallon

  20. Externalities Module Shows the economic results of two different types of externalities and appropriate policies to internalize these externalities. In Positive Externalities,you subsidize vaccine production and development costs in order to maximize total net benefits to society from providing flu shots. You may view the results for a competitive or monopolistic vaccine market. In Negative Externalities, you use pollution permits or taxes to control pollution in the steel industry in order to maximize total net benefits to society.

  21. Positive Externalities Module • Initial Conditions • Government Spending • Social Net Benefits Lost • # of Flu Shots • Price of a Flu Shot • MSB of a Flu Shot • MPC of a Flu Shot • Choices • Development Cost • Market Structure • Subsidy Type • Results of Market Choices • Vaccine Price • Marginal Private Cost • # Vaccinated • MSB • MSC • Total Profit • Total Social Net Benefits

  22. Negative Externalities Module • Initial Conditions • Production • Pollutants • Price of Steel • Employment • Average Wage • Current Regulation • MPC • MSC • MEC • Total External Cost • Results of Pollution Control • Steel Output • Pollutants • Price of Steel • Employment • Average Wage • MPC • MSC • MEC • Pollution Control Choices • Issue Permits • Set a Tax

  23. Macro1 Module Shows annual and long run simple multiplier effects of a fiscal or monetary policy. You get to cure depressions or inflations by manipulating taxes, government spending, and the interest rate, and see the results.

  24. Macro1 Module • Initial Conditions • Consumption • Investment • Government • Real GDP • Unemployment Rate • Inflation Rate • Nominal Interest Rate • Taxes • State of the Macroeconomy • Inflation • Recession • Annual and • Long Run Results • Consumption • Investment • Real GDP • Unemployment Rate • Inflation Rate • Policy Decisions • Government Spending • Taxes • Interest Rate

  25. Drug Wars Module Shows the benefits and costs associated with allocating a limited budget. You have $100 billion to minimize the damage done by drug use. You can spend the budget on: therapy, law enforcement, and/or education and see the results.

  26. Drug Wars Module • Initial Conditions • Property Damage • Lives Lost • Total Results • Damages • Damage Prevented • (Approval Rating) • Allocate Drug Wars Budget • Law Enforcement • Education • Therapy • Set Value of Life • Drug Users • Non-Users • Marginal Results • Damage prevented by budget category

  27. Banking Module Shows how the FED uses the required reserve ratio, the discount rate, and open market operations to control the money supply. You can then view the effects of your policy choices on the balance sheets and profit and loss statements of “high risk” and “low risk” banks.

  28. BankingModule • Initial • Conditions • Discount Rate • Required Reserve Rate • Money Supply • Interest Rate • Demand Deposits • Monetary Policy Tools • Required Reserve Ratio • Discount Rate • Open Market Operations • Policy Results • Money Supply • Bank Deposits • Interest Rate • Financial Impact to High and Low Risk Bank • Balance Sheet • Profit and Loss

  29. E-Growth Module Shows how one or more factors affect a nation’s economic growth. You set social and/or economic variables, and review the results generation-by generation for six generations.

  30. E-GrowthModule • Initial • Conditions • Population • Real GDP • Consumption • Investment • Public Goods • Choice • Variables • Social • Age of Marriage • # of Children • R&D • Economic • Investment • Public Goods • Results • by Generation • Population • Population Growth • Real GDP • Real per Capita GDP • Consumption • Real per Capita Consumption • Real Value of Capital Stock

  31. Macro2 Module Shows yearly, simple multiplier results from fiscal and/or monetary policies. You get to cure recessions and inflations by manipulating taxes, government spending and the money supply, and see the yearly results.

  32. Macro2 Module • Initial Conditions • Consumption • Investment • Government • Net Exports • Real GDP • Unemployment Rate • Inflation Rate • New Price • Nominal Interest Rate • Real Interest Rate • State of the Macroeconomy • Inflation • Recession • Yearly Results • Consumption • Investment • Net Exports • Real GDP • Unemployment Rate • Inflation Rate • New Price • Nominal Interest Rate • Real Interest Rate • Performance over Time • Aggregate Supply • Aggregate Demand • Policy Decisions • Government Spending • Taxes • Money Supply

  33. Macro3 Module Shows how an open-macroeconomy works. You set fiscal and monetary policies to cure recessions or inflations and see the yearly results. Long run adjustments in prices and wages, and supply and demand shocks are also included.

  34. Macro3 Module • Initial Conditions • Government Spending • Taxes • Money Supply • Real GDP • Consumption • Investment • Net Exports • Inflation Rate • Price Level • Wage Level • Unemployment Rate • Exchange Rate • Real Interest Rate • State of the Macroeconomy • Inflation • Recession • Short and Long Run Results • Real GDP • Consumption • Investment • Net Exports • Unemployment Rate • Inflation Rate • Price Level • Wage Level • Real Interest Rate • Exchange Rate • Policy Decisions • Government Spending • Taxes • Money Supply

  35. Exchange$ Module Shows how the foreign exchange market works. You change domestic or foreign supply or demand factors and observe the effects on market equilibrium. You may also regulate the market by changing a fixed exchange rate and see the results.

  36. Exchange$ Module • Initial Conditions • Domestic • GDP • Price Index • Interest Rate • Political Stability Index • Foreign • GDP • Price Index • Interest Rate • Political Stability Index • Initial Equilibrium • Price • Quantity • Regulate Market • Control Price • Above Equilibrium • Below Equilibrium • Disturb Market • Foreign or Domestic • Real GDP • Price Index • Interest Rate • Political Stability Index • Results • New Equilibrium Price and Quantity • Results • With Regulation • Without Regulation

  37. $Distribution Module Shows the distribution of income in a society and how that distribution can be affected by a number of variables. You can also alter the distribution of income by changing government policies and by introducing non-governmental disturbances.

  38. $Distribution Module • Initial Conditions • Distribution of Income by Family • Quintile Distribution • Change the Distribution • Economic Disturbance • Policy Disturbance • Output Results • Distribution of Income by Family • Quintile Distribution

  39. SimEcon® Usage Recommendations • Small classes - open format, essay • Medium classes - mixed format, essay • Large classes - templates, short answer

  40. SimEcon® Assessment Methods • Student Surveys • Instructor Reviews and Surveys • Paired Class Comparisons • Paired Topic Comparisons

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