Throughout the Virtual Economy you will find explanations of relevant economic theory. You may want to refer to them if you are studying a particular topic or if you want to find out more about how different aspects of the economy work.
| Floor |
Room |
Section in room |
Theory |
| 3rd - Economic policy |
Policy tools |
Income tax |
T1 - The canons of taxation
T2 - Progressive and regressive taxes
T3 - Marginal and average tax rates
T4 - Demand-side and supply-side effects of tax changes
T5 - The Laffer curve |
| Policy tools |
Government expenditure |
T1 - Transfer payments
T2 - Public and merit goods
T3 - Current and capital government expenditure
T4 - Automatic and discretionary government expenditure
T5 - The multiplier |
| Policy tools |
Interest rates |
T1 - Why do interest rates vary?
T2 - Monetary policy - using interest rates
T3 - The effect of interest rates on demand
T4 - How are interest rates maintained? |
| Policy tools |
VAT and other indirect taxes |
T1 - The effect of indirect taxes on prices
T2 - Progressive and regressive taxes
T3 - Who pays how much tax - the effect of elasticity
T4 - Taxing to compensate for externalities |
| 3rd - Economic policy |
Outcomes |
Unemployment |
T1 Costs of unemployment - who pays?
T2 Types of unemployment
T3 Causes of unemployment - whose fault is it?
T4 Phillips Curve - the relationship between unemployment and inflation |
| Outcomes |
Debt ratio |
T1 The relationship between the PSNCR & the National Debt
T2 Causes of debt - what determines it?
T3 Debt and Europe - do we meet the Maastricht criteria? |
| Outcomes |
Inflation |
T1 Costs of inflation - who pays?
T2 Demand-pull inflation
T3 Cost-push inflation
T4 Phillips Curve - the relationship between unemployment and inflation
T5 Inflation and the money supply |
| Outcomes |
Economic growth |
T1 Causes of the trade cycle
T2 Costs of growth - who pays?
T3 Sources of growth - where does it come from?
T4 Boosting growth - how can we grow more? |
| Outcomes |
PSNCR |
T1 The relationship between the PSNCR and the trade cycle
T2 Cyclical and structural PSNCRs
T3 The PSNCR and money supply - the effect of borrowing on the money supply
T4 The relationship between the PSNCR & the National Debt |
| 4th floor - Library |
Theory |
Neo-Classical |
Free market theory
Say's Law
Quantity Theory of Money |
| Theory |
Keynesian |
The labour market
The market for loanable funds (money market)
The multiplier
Keynesian inflation theory |
| Theory |
Monetarist |
Quantity theory of money
Expectations-augmented Phillips Curve |
