Introduction

This is a game designed to help improve your understanding of macroeconomics and the process of economic growth.

You will be working in small groups each representing a different region of the country and your aim is to increase the wealth of your region. This wealth is represented by the amount of assets you possess.

Some Background

Macroeconomics looks at issues relating to the whole of the economy. The sheer size and complexity of a whole economy is difficult to comprehend but you can get a flavour by just standing in any town or city centre and looking at what is going on.

Almost everyone around you will be engaged in some form of economic activity; they may be tourists, people at work, people shopping, people relaxing in some way, people cleaning up, council workers doing things, people travelling, people talking on mobile phones, people listening to music and so on. All these things represent some form of economic activity and somehow have to be captured and understood when looking at macroeconomics.

The Basics

The Economy

An economy consists of individuals all of whom are engaged to a greater or lesser extent in production and exchange. Even a small child will be involved in this, for example, small children may be using a nursery where someone is supplying their labour to look after that child and in return the parents may pay a fee or the fee is paid for by the local authority. The amount of production and exchange that goes on in an economy represents the level of economic activity.

Image: Every city in every country is alive with acitivity - every person, vehicle, building, etc. is making some contribution to economic activity! Copyright: Sebastian Stefanov

The Circular Flow

All the resources in an economy are classified as land, labour and capital. These resources must come from somewhere and are generally 'owned' by somebody or some organisation. Somebody somewhere owns the land you are currently sitting/standing on, the computer you are reading this information on, the paper it is printed on, the machinery and equipment in factories and offices across the country and of course individuals own their own labour. We refer to the owners of these resources as households. Households sell these resources to others to use for production.

Business organisations throughout the economy - whether in the public or private sector - seek to buy these resources to produce goods and services. We refer to the buyers of these resources as firms.

Households sell the resources they own to firms (the Factor Market) and the income they receive from the sale of these resources is used to buy the goods and services produced by firms that we need to conduct our everyday lives (the Goods Market).

Every day, millions of people make millions of decisions about purchasing goods and services of all types for all sorts of reasons. It might be a small decision about which newspaper to buy in the morning right through to buying a house, buying another company or buying a new hospital. The total impact of these millions of decisions is what we are interested in when studying macroeconomics.

Image: Even in quiet rural areas there is economic activity taking place - electricity pylons have to be built, sited and maintained as well as carrying electricity, telecommunications lines connect people and the land is farmed. Someone has to provide and maintain the roads as well! Copyright: Thomas Bush

The Aim

The aim of the game is to try to replicate (on a small scale) what goes on in an economy and build your understanding of some of the important concepts associated with economic growth.

The Game

Your region will be associated with the production of a particular product and you will have specific resources that will help you to produce these goods. The aim of your group is to produce as much of the resource as possible and use these goods to buy the things you need to survive and prosper.

The resources you buy will be the region's assets and will be how your wealth is measured. You will have some money to enable you to make transactions with other regions to get the things you want but there is no benefit at all in having a large amount of money - your wealth will be measured only in terms of the assets you own.

To survive at the poverty line, you will need to ensure you purchase the following - this, remember, is the minimum you need.

• Six units of food
• Four items of clothing
• Two items of shelter

The more you have the wealthier you are. Your task is to produce the goods you specialise in and sell them to other regions to generate income to enable you to buy more items.

We are making an initial assumption that this is a free market so there is no interference from the government in the form of taxes or any government services. The market therefore reigns supreme and supply and demand will be an important factor in your decision-making.

You will be given a certain amount of resources and money to start you off. As you begin to engage in economic activity, you must assign one member of the group the task of recording all the transactions that you make. These must be entered on the record sheet (available as HTML or Word). Accurate recording of the transactions is essential.

There will be a total of ten rounds in the game. At the end of each 'year' (round) your teacher (the Office for National Statistics) will collect your record sheets and collate all the transactions to record the National Income (Gross Domestic Product) for the country as a whole.