ECONOLAND-2001 ---- MANUAL ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ | | | /+=x=-=/+=x=-=/+=x=-=/+=$$$$$$$$$=+\=-=x=+\=-=x=+\=-=x=+\ | | $ $ | | $ Welcome to ECONOLAND-2001 $ | | $ $ | | $ Copyright 1991, 1993 $ | | $ $ | | $ Michael C. Lovell $ | | $ Wesleyan University $ | | $ Middletown, CT 06457 $ | | $ $ | | /+=x=-=/+=x=-=/+=x=-=/+=$$$$$$$$$=+\=-=x=+\=-=x=+\=-=x=+\ | | | | This program provides you with a unique opportunity to | | administer macroeconomic policy in ECONOLAND, a mythical | | republic located in your personal computer, halfway between | | the artificial models of the textbook and the real world. | | | ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ This program was originally developed for use by students enrolled in a college level course in macroeconomics. Any one who has taken such a course should be particularly well prepared for the exciting challenges offered by ECONO- LAND-2001. And if you have never had a formal course in macroeconomics, the training missions offered by the ECONOLAND-2001 program may help you get up to speed. ECONOLAND-2001 MANUAL This manual is in file MANUAL.PRN. It will guide you through the training exercises and prepare you for exciting challenges to your stabilization skills, such as OPEC price hikes, war, disarmament, technological unemployment, and a productivity slowdown. It defines the basic concepts used in the program and explains how to install the ECONOLAND-2001 program. The appendix presents de- tailed information about how to install the program. Additonal documentation files are also included on the distribution disk --- see file README.1st You may find it convenient to use the program LISTER, included on the documen- tation disk, to prepare hard copy of MANUAL.PRN and other files on your dot- matrix printer. TABLE OF CONTENTS Chapter 1 Starting the Program 1.1 Start-up 1.2 Politically Constrained (PC) Versus Unconstrained (PU) Modes 1.3 Main Menu Options and the Information Box Chapter 2 History of Econoland 2.1 What Went Wrong? 2.2 Table 1: Business Conditions Digest Chapter 3 Training Mission Sequence #1 Government Spending Entering Decisions #2 Tax Reform Experiment #3 Monetary Policy Experiment #4 Managing the Economy - 4 More Years Output, Restart, Modify and other Options Chapter 4 Evaluating Economic Performance Table #2 Economic Indicators #3 Survey of Current Business #4 Performance Evaluation - Measuring Your EPQ #5 International Financial Statistics Chapter 5 Eight Challenging Assignments #1 Normalcy; #2 OPEC; #3 WARS! #4 Peace; #5 Automation; #6 Productivity Slowdown; #7 Designer Experiments; #8 Random Shocks Appendix I: Technical Information 1. Set Up Options: Renaming Teams, Adding Teams, Appointing Officials 2. Configuration Option Menu: Sound Abatement, Printer Options Monitor Adjustments. 3. Printing Graphs, Technical Startup Options, Directory\Path to Files 4. Files Used by ECONOLAND-2001 5. Memory Management Appendix II: Group Activities Appendix III: Bugs, Copying, Ordering Chapter 1: Starting the Program Your favorite Travel Agent may not be able to sell you tickets to Econo- land, but your IBM compatible PC will take you there, provided it is equipped with either two floppy disk drives or one floppy and a hard-disk. THe steps for installing the program on your computer are explained in the README.TXT file on the distribution disk. Once your program is installed, just follow the steps listed below and your computer will whisk you away to Econoland. 1.1 Startup: See file INSTALL.DOC for information about how to install the program, which is a onetime operation. Although the program runs most expeditiously on a computer equipped with a hard disk, it will run on a computer equipped with two floppy drives but no hard disk. Once the program is installed on a hard disk, you start it by just typing C:\ECONO\CECONO (followed with Your computer will promptly time-warp you through time and space to Econoland year 2001. If you have installed the program to run on two floppy drives, start the program by typing A:\BECONO Wait patiently while the computer loads the program and time-warps you through time and space to Econoland year 2001. You can find additoinal information about installation in the appendix of this manual. 1.2: Politically Constrained Versus Politically Unconstrained Modes As soon as you arrive at Econoland, your computer will display an opening wel- come message. Tap any key and you will be confronted with a critical choice: do you want to run the computer in Politically Constrained or Politi-cally Un- constrained Mode --- PC or PU? Politically Constrained (PC) Mode: If you push C to select this option, your policy making efforts may be blocked, at least in part, by a balky Congress and cantankerous senators. For example, while you may be able to lower taxes, it is extremely unlikely that the President will be able to get any tax hikes that you propose through the House. Furthermore, you will not be able to assume control of the Federal Reserve Board; its chair will be inherited from the pre- vious administration and will act as an independent agent insulated from polit- ical pressures. If you select the PC Mode you will be frustrated, but the President may be able to shift blame from the White House to the Federal Re- serve Board and Congress when things go wrong. Political Unconstrained (PU) Mode: If you select this mode by pushing U, you will have complete authority to adjust taxes, the level of government spending and monetary policy! You may receive suggestions from time to time from the Federal Reserve Board and more advice than you want from Congress and the Sen- ate --- but you will be free to ignore their sugges- tions and proceed on your own initiative unhampered by the type of po- litical constraints that limit the ability of the President of the United States to implement policy objectives. Take Charge! 1.3. Main Menu Options and the Information Box: The Main Menu offers you a list of options plus an Information Box which will keep you posted on the program's status. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ | MAIN MENU | | League #1: National | | T Select Team (#1: Incumbents) | | M Select Training Mission (#1: Government Spending Experiment: | A Advance from Training Missions to Challenging Assignments | | P Proceed to Experiment | | O Output Option Menu | | S Setup Options (Add Teams, Change Drive, Fix Monitor, etc.) | | H HELP; X Exit from program | |~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ | Training Mission #1: Government Spending Experiment | League #1: National | Team #1: Incumbents | Federal Reserve |Board: Alan Greenspan, Chair | | Council of Economic Advisers: Laura Tyson, Chair | | Alan Blinder ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Select options (e.g., T or M). Then touch P to Proceed to experiment The Information Box near the bottom of your screen advises that the program is prepared to undertake Training Mission #1: Government Spending Experiment. The Information Box also reveals that Team #1, Incumbents of the National League is currently in charge. You can activate the next team, Team #2: Entrepreneurs, by pushing T. The ECONOLAND-2002 program includes two pre-set teams in order that you can undertake an initial trial run without taking time out to set up teams. But it is easy to place yourself in charge. Just push S in the Main Menu and you will be able to use the Setup Option Menu to Edit the team officials by tap-ping E and following the simple instructions. You will find it easy to ap-point offi- cials in Econoland; unlike Washington, the President of Econoland can make ap- pointments without bothering with Senate confirmation hearings. Tap M when you are wish to return to the Main Menu. As indicated by the bottom line prompt, tapping P will allow you to proceed to your first experiment. But before proceeding you should examine the histori- cal record of Econoland reported in the next chapter of this manual. If you study the failures of the prior administration you may do better when you take charge. Chapter 2: HISTORY OF ECONOLAND 2.1: What Went Wrong Your first task will be to study data summarizing the recent and unfor- tunate history of Econoland's economy during the last eight years. The table shows that the economy suffered from disruptive instability during the previ- ous administration: þ Unemployment swung erratically, at one point climbing above 10%. One worker in 10 could not find a job! þ Inflation averaged an unacceptable annual rate of 7.8% over the entire eight years. þ During the election campaign much was made of the fact that the "Economic Discomfort Index" -- the sum of the unemployment rate plus the inflation rate -- averaged a disgraceful 13.7%. These basic facts summarize the economic disaster experienced under the last administration. To find out more about what happened, it is necessary to study the nitty-gritty table details more closely.. 2.2 Table #1: Business Conditions Digest The Business Conditions Digest table is an economic report card provid- ing detailed information about the poor performance of Econoland's economy. The ten economic concepts reported on successive columns of the table are as relevant to the analysis of economic developments in Econoland as they are to the understanding of economic conditions in the United States. When you take charge of economic policy in 2001 the results of your decisions will be report- ed on similar tables. ECONOLAND Table #1: BUSINE$$ CONDITION$ DIGEST DATE GDP GOVT INV CON TaxR% CPI% MoneyS MGR% IntR% UnEmp% 1993 1464 331 156 977 22.6 11.7 396 1.3 17.5 3.3 1994 1458 345 122 991 22.6 10.1 415 4.8 9.1 10.1 1995 1595 353 160 1082 22.6 5.2 453 8.8 12.2 6.2 1996 1643 362 139 1142 20.0 5.3 490 8.1 6.5 7.2 1997-1 1737 375 152 1210 20.0 3.9 510 16.3 3.3 4.9 1997-2 1761 379 163 1219 20.0 6.2 524 10.6 6.4 3.4 1997-3 1783 383 174 1226 20.0 8.6 535 8.6 9.9 2.6 1997-4 1806 387 185 1234 20.0 11.0 546 8.0 13.3 2.3 1998-1 1774 391 148 1234 20.0 10.0 556 7.3 16.2 5.3 1998-2 1790 395 151 1244 20.0 8.8 567 8.2 14.5 7.1 1998-3 1832 399 164 1269 20.0 7.8 581 9.8 11.1 6.7 1998-4 1882 403 179 1300 20.0 7.5 597 10.9 9.6 5.0 1999-1 1895 407 195 1293 23.0 7.5 611 9.8 12.3 4.7 1999-2 1924 408 213 1303 23.0 7.7 627 10.0 12.8 4.4 1999-3 1924 406 210 1308 23.0 7.5 642 9.6 14.8 5.7 1999-4 1955 414 216 1325 23.0 7.1 659 10.6 13.1 6.0 2000-1 2004 416 219 1369 21.0 6.9 677 11.1 12.9 5.1 2000-2 2036 417 222 1397 21.0 7.1 696 11.4 12.9 4.4 2000-3 2011 419 194 1398 21.0 6.5 715 11.0 13.5 6.8 2000-4 2050 420 212 1419 21.0 5.8 736 11.6 12.0 7.2 AVERAGE: UnEmp% = 5.9%; CPI% = 7.8%; EDI= 13.7%. Each row of Table 1 presents information for the particular time period iden- tified in the first column. Data are reported only annually for the earlier years but more recent data are presented quarterly (four times a year). Thus the row labeled 1994 reports what happened during the whole year, while the row labeled 2000-1 covers only the first quarter (January through March) of the year 2000. Similarly, second quarter (April through June) of 1999 data are reported on row 1999-2. Here is a glossary explaining the meaning of each of the concepts reported on the table. DATE Year for annual data or Year & Quarter (e.g.,1997-2 is April-June of 199- 7). As in the United States, data on GDP and a number of other major economic indicators are published every three months --- i.e. quarterly. GDP (Gross Domestic Product).GDP is the market value of all goods and services produced in the economy. This is the best single measure of the nation's output. The GDP data reported for Econoland are corrected for inflation. Because of price fluctuations, the dollar bill provides only a "rubber yardstick" for comparing economic values over time. Real GDP data use prices from a particular "base year" to help you compare the GDP and oth- er data from different years. The GDP data for Econoland are measured in terms of prevailing 1993 prices. How much of the nation's output is the result of government spending, how much is invested for a more productive future, and how much will be spent by con- sumers this year? The table reports the three basic components of Econoland's real GDP. GOVT Real government spending on goods and services. This is the part of the nation's current output that is used for national defense, education, highway construction, police protection, and other government goods and services. INV Real investment includes new factory buildings, machinery and inventory accumulation plus new house and apartment construction. In the context of GDP accounting, investment does not refer to the purchase of stocks and other financial securities. CON Real consumption is that part of total output purchased by consumers, including clothing, books, new cars, food, etc. TaxR% The tax rate is the proportion of the nation's income that the government levies to finance government spending. If tax revenue falls short of government spending, the deficit must be made up by borrowing. Deficit spending increases the national debt. CPI% The inflation rate. Inflation occurs when the prices of most goods are rising and each dollar purchases fewer goods or services. The rate of inflation is measured by the annual percentage rate of change in the Con- sumer Price Index (CPI). Deflation is negative inflation; if and when the price level falls, the CPI% will be negative, signifying defla- tion. Money$ The money supply. The money supply, defined for Econoland as the sum of currency in circulation plus checking deposits, is controlled by the Fed- eral Reserve System. MGR% The money supply growth rate (percent per year). How rapidly the money supply changes over time has a fundamental effect on inter- est rates, the pace of economic activity, and inflation. IntR% Interest rate (percent per year). This is the price charged to business firms when they borrow to invest in new factories and machinery. Consum- ers pay interest when they borrow to buy a new car or house. UnEm% Unem- ployment rate (Number unemployed/Labor Force). While workers obviously suffer when the unemployment rate rises, hard times for workers general- ly mean that businesses find sales are under target and profits are short of the level enjoyed in prosperous times. EDI Economic Discomfort Index. This concept, the sum of the unemployment rate plus the annual rate of inflation, provides in one single number a measure of how well the economy is performing. When the economy slides in to recession, the discomfort index will rise sharply in response to the rise in unemployment. It will also soar if inflation gets out of control. Further, disinflation (falling prices) also adds to economic discomfort. In the 1990 election campaign, the incumbent candidate was embarrassed when the challenger pointed out what has happened to the EDI. EP-SCORE The Economic Policy Score is an overall measure of economic perfor- mance. Points are rewarded when real GDP grows, making more goods and services available to the public. But your EP-Score will drop rapidly when the EDI climbs as a result of high inflation or excessive unemploy- ment. Chapter 3: Training Mission Sequence Overview: Once you have started the Econoland-2001 Program the Main Menu of- fers you an unprecedented opportunity to enter into a Four Mission Training Sequence designed to help you appreciate how various policy measures influence economic developments. For Training Mission #1 you will be asked to adjust the level of government spending over the years 2001-2004 --- this is the first term of the new president's administration. For Training Mission #2 you are allowed to "replay history," going back over the years 2001-2004, but manipu- lating tax rates rather than government spending --- the government spending levels will remain at the level you set in Training Mission #1. For Training Mission #3 you once again replay history over the same period ---this time you get to set monetary policy, but you must live with the fiscal policy decisions you made on your first two training missions. Thus the first three Training Missions give you a chance to learn, one at a time, how the economy responds to each of three basic policy measures you can employ in an attempt to improve the performance of Econoland. When you have completed these first three Training Missions, you will move on in Training Mission 4 to manipulate the three policy measures simultaneously over the years 2005-2008, assuming that the president is reelected for a second term. Training Mission #1: Government Spending As is explained in most introductory economics text, an increase in the pace of government spending provides a stimulus to economic activity. Not only are people put to work producing the additional goods and services the govern- ment is buying. When those workers spend their additional income, a further spending boost adds additional stimulus to the economy. Textbooks explain that the effect of an increase in government spending on GDP equals the government spending multiplier times the change in government spending, but things are not quite that simple in Econoland. How big a stimulus a hike in government spend- ing will produce in Econoland depends in part upon how close the economy is operating to capacity. If labor markets are already tight, the demand for ad- ditional workers will push up wages, contributing to inflationary pressures. Inflation is an unpleasant side effect of the econom-ic stimulus of stepped up government spending; the inflationary response is likely to be particularly serious when there is little excess capacity. How a change in government spending affects Econoland can be appreciated by comparing the results of two experiments --- consider the experience of two policy makers, the Candy Keynes versus the Fiscal Tightwads in year 2001: ECONOLAND Table #1: BUSINE$$ CONDITION$ DIGEST Train- ing Mission #1: Government Spending Experiment League # 1: National Team #1: Candy Keynes DATE GDP GOVT INV CON TaxR% CPI% MoneyS MGR% IntR% UnEmp% 2001-1 2111 424 231 1455 21.0 4.7 766 16.4 12.0 8.7 2001-2 2192 434 253 1505 21.0 4.0 802 18.4 8.1 6.9 2001-3 2259 444 274 1541 21.0 5.1 839 18.9 7.2 4.4 2001-4 2294 454 290 1549 21.0 8.7 876 17.4 9.0 3.1 AVERAGE: UnEmp% = 5.8%; CPI% = 5.6%; EDI= 11.4%. EP SCORE = 198 points The Candy Keynes were proud that their aggressive application of fiscal stimu- lus --- a rapid increase in government spending --- had successfully pushed the economy to full employment at the expense of only moderate inflation. A rival policy team, the Fiscal Tightwads, pursued a different strategy. Their program of fiscal stringency stopped the upward spiral in government spending. Team #2: Fiscal Tightwads DATE GDP GOVT INV CON TaxR% CPI% MoneyS MGR% IntR% UnEmp% 2001-1 2111 424 231 1455 21.0 4.7 766 16.4 12.0 8.7 2001-2 2160 414 253 1492 21.0 3.6 801 18.1 8.1 8.4 2001-3 2210 404 278 1529 21.0 2.9 840 19.3 6.1 7.4 2001-4 2262 394 304 1564 21.0 2.6 880 19.4 5.4 6.1 AVERAGE: UnEmp% = 7.6%; CPI% = 3.5%; EDI= 11.1%. EP SCORE = 167 points The Fiscal Tightwads took pride in the fact that their policy had kept the lid on inflation. While they conceded that their victory against inflation was achieved at the cost of unemployment, they argued that their policy had served to stimulate private investment spending, thus insuring a more productive econ- omy in the years ahead. Because the Federal Reserve System is insulated from political pressures it was able to act independently and to set its own course in trying to achieve what was best for the economy. Monetary policy was tighter in the Candy Keynes ex- periment because the Fed was attempting to limit the inflation by pushing up interest rates and moderating the rate of growth of the money sup-ply. In the Fiscal Tightwad experiment the Fed attempted to partially offset the effects of tight fiscal policy: it pumped up the money supply more aggres-sively and pushed down interest rates in order to encourage investment spend-ing, to stim- ulate GDP, and to limit the rise in unemployment. Observe that looking at the historical track record for a single experiment in isolation does not reveal much about the effects of policy because it is hard to disentangle the effects of policy from the underlying cyclical forces that are influencing the performance of the economy. But the ECONOLAND-2001 com- puter program provides an economic laboratory for conducting controlled exper- iments. A comparison of the two computer experiments makes it is clear that the quite different fiscal strategies followed by the two teams made a differ- ence; fiscal policy does indeed matter. Much can be learned by experimenting with alternative policy scenarios on a computer model of the economy. Of course, one year is not long enough the see the full implications of alter-na- tive policies. That is why your first Training Mission will extend for the full four-year term of our victorious president. Entering Decisions: To enter your government spending decisions for the open- ing quarter of 2001, first check the Information Box under the Main Menu to make sure that the appropriate team is active and that the program is set for Training Mission #1. Then push P to proceed. Now you will find a new screen with table headings and the following Decision Box: ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ | | | Enter GOVT(e.g.,444) for quarter 2001-1| | | or push the ENTER (Return) key for the default value ( 444) | | Touch the ESC key to end the simulation. | | | ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ If you just push the computer will automatically enter the default val- ue of 444 --- unless an alternative value is explicitly prescribed, govern-ment spending at about 5% per annum, which reflects the inherent tendency for the role of government to expand in response to political pressure and the need to keep more or less in pace with the growing population and the trend expansion rate of GDP. Instead, you can respond to the prompt by entering your own deci- sion, followed by . For example, if you enter 440 and then push the Decision Box changes to: ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ | GOVT = 440 | | | | Touch P to Process this quarter's decision; R to Revise; | | Y simulates to Year end; T simulates to the end of the President's term | | Touch the ESC key to end the simulation. | ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Enter P to find out the result of your decision. After you have analyzed what has happened, enter your decision for the next period, and so on through to the end of the four year period. Notes: To speed the action, you can make your decisions for several quarters at one time by pushing Y or T instead of P. Or you could leave the simula- tion early, before finishing the full four years, by pushing the ESC key. If certain influential members of the Senate regard your proposed fiscal policy as extreme, they will flash their objection onto your monitor: ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ | Sorry, The Senate Majority Leader objects that your budget will cause | | too much inflation unless you scale back your proposed increase in | | govern- ment spending. You are advised to ask for no more than 505 | ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ If you are operating in PC Mode, you will have to abide by their con- straint. If you are operating in PU Mode, consider their advice carefully and then enter any level of government spending you like! When you have completed the experiment, the computer will automatically move you over to the Output Menu. You will be prompted to look at graphs and ta- bles revealing how Econoland has fared under your leadership. Detailed information about how to interpret the evidence presented on the tables is presented in Chapter 4. Chapter 4 also explains how you can send a copy of the table summarizing your results on Training Mis- sion #1 to your printer in order that you can analyze more carefully what has happened and preserve for prosperity the results of your first attempt at achieving economic stability for Econoland. Training Mission #2: Tax Reform Experiment The second Training Mission back-tracks over the same 1991-94 period but allows you to try to improve on your earlier achievements by adjusting the tax rate each quarter; government spending will remain at whatever level you spec- ified in Training Mission #1. When Econoland stagnates, suffering from excessive unemployment, a cut in the tax rate may help to stimulate the economy. The tax cut will leave Econo- land's consumers and business enterprises with more discretionary purchasing power. To the extent that they spend these funds, the economy will be stimu- lated. Conversely, when inflation signals that the economy is over-stimulat- ed, hiking taxes may be the appropriate fiscal strategy. A hike in taxes will discourage consumer spending, thereby reducing excess demand and relieving in- flationary pressures. Lower tax rates mean that the government will have to finance more of its spending by borrowing, which obviously implies that the government debt may grow more rapidly; as a consequence, the government may incur a higher inter- est cost on its debt, which will contribute to even higher deficits in future years. Tax adjustments are not an ideal fiscal panacea for stabilizing the economy. To the extent that the public recognizes that tax cuts in recessions are only temporary and are likely to be balanced out by higher taxes in a boom, consum- ers may well be inclined to absorb the fluctuations in their disposable income out of savings rather than consumption spending. Training Mission #3: Monetary Policy Experiment Monetary policy is the primary focus of Training Mission #3. In this experiment the Chairman of the Federal Reserve Board takes charge, setting in- terest rates in order to improve the performance of the economy. Fiscal con- trols --- the level of government spending and tax rates --- are kept con-stant at the level inherited from the two previous experiments in order that the full impact of monetary policy will be clearly revealed. Back-tracking over the year's 2001-2004 should contribute to improved economic performance. The central bank can select the level of interest rates as the primary control variable, allowing the money supply to rise or fall as required in order to achieve the targeted interest rate. If the monetary authorities conclude that the economy is overheating, perhaps as a result of mistaken fiscal policy, they can respond by hiking interest rates. The "tight money" policy means that business firms will have to pay a higher rate of interest on the funds they borrow to finance the construction of new factories and machinery, potential car buyers will be discouraged because of the high monthly payment on that new vehicle, and potential home buyers will find that they cannot afford the high- er monthly mortgage payments required when borrowing becomes more expensive. All this means that a decision of the Fed to hike the interest rate will slow down the economy, curbing inflationary pressure but perhaps generating a rise in unemployment. When recession makes unemployment rather than inflation the primary concern, a role back of interest rates may help to stimulate the econ- omy. You may have noticed that in the first two Training Exercises both the interest rates and the money supply were subject to considerable fluctuation. In both these training exercises the Fed was maintaining its independence from the Executive Branch of Government --- you were not responsible for monetary policy. In these experiments the Fed chose to "Lean Against the Wind," fol- lowing a type of policy sometimes practiced in the United States. Under a Leaning Against the Wind strategy, the Fed adjusts interest rate periodically, after taking careful note of what is happening to both the pace of inflation and the level of unemployment. When inflation threatens, the Fed Leans Against the Wind by raising interest rates in order to discourage excessive spending and slow down the economy. Conversely, when rising unemployment is thought to be the more serious problem, the Fed lowers interest rates in an attempt to stabilize the economy. In training Mission #3 the computer prompts you with a suggested inter- est rate. You will be encouraged to "Lean Against the Wind," raising interest rate when inflation threatens and lowering the interest rate if unemployment signals that there is excessive slack in the economy. But you will have the option of departing from these suggestions in order to set your own rate. Or you can focus on controlling the rate of growth of the money supply by select- ing the O (for Option Menu) in the Decision Box in order to confront the fol- lowing choices: |~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~| | Select the Fed's Control Instrument (currently Leaning Against the Wind) | | Touch M to control the rate of growth of the money supply | | | | Tap i to peg the rate of interest | | | | Push W to activate Wage Price Guideposts | | | ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Rather than setting the rate of interest, this option menu allows the Fed to control the rate of growth of the money supply --- just push M. When you se- lect MGR%, you lose control of Intr% --- the rate of interest will fluctuate in response to market forces, rising or falling as required in order to equate the demand for money with the supply of money that you prescribe Many economists argue that given the limited state of current knowledge about how the economy actually works, any attempt at fine-tuning the economy by manipulating the in- terest rate is likely to do more harm than good. These monetarists argue that it is best to abandon discretionary monetary policy in favor of the simple rule of constant money supply growth regardless of the current level of unemployment or rate of inflation. The Econoland-2001 money supply control option allows you to put this rule into action on your comput-er, but only if you operate in PU Mode. Wage Price Guideposts: Observe that the Option Menu also offers you the op- tion of invoking Wage Price Guideposts. According to conventional economic wisdom, neither Wage-Price Guideposts or out right wage and price controls are regarded as effective techniques for controlling inflation --- but the conven- tional wisdom is often wrong, and you may want to see for yourself. Training Mission #4: Managing the Economy - 4 More Years Thanks in part to your skill in managing the economy, your President has been reelected for a second four year term. You have accepted his invitation to remain in charge of economic policy. For the second term, which starts at the beginning of 1905, you inherit the economic situation you created in Ex- periments 1 through 3. During the second term, fiscal and monetary policy will be set simultaneously. Each quarter both tax rates and government spend-ing can be adjusted. And monetary policy can also be modified each quarter --- the Fed can set either the interest rate or alternatively the rate of growth of the money supply, depending on which policy control variable you choose from the Policy Option Box activated by touching O. Output Options: You can terminate an experiment at any point by pushing Func- tion Key F7 whenever the Decision Box is at the bottom of the screen. The Out- put Menu that will appear on your monitor allows you to plot a graph of your output and to display several different types of tables on your monitor or, if you like, send your output to your printer or store it in a disk file. From the Output Menu, you return to the main menu by tapping M. Restart, Modify and other Options: Once at the main menu you can push P to proceed. Since you have previ- ously played the experiment, you will be given the option of RESTART, MODIFY or CONTINUE: The CONTINUE option allows you to compete the experiment if you haven't already completed it. The MODIFY option allows you to replay your earlier experiment, starting at the date you choose (e.g. 2007, quarter 2). The RESTART option time-warps you back to the very beginning of the experiment and allows you to try again --- Practice Makes Perfect. After you have completed the four Training Missions, carefully study the re- sults in order that you can learn from experience. Then you can test your met- tle by moving directly ahead to confront the Eight Challenging Assignments of- fered by pushing the A option on the Main Menu. Chapter 4: Evaluating Performance The Business Condition Digest table presents much useful information about what is happening in Econoland, but it does not tell the full story. Additional information is available on other tables that can be generated from the program's Output Menu. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ | OUTPUT MENU --- Tables and Graphs | | ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ | | | | S Select Table: #1 Business Conditions Digest | | D Select Table Destination: Monitor Screen | | | | B Produce taBle; Q for Quarterly or Y for Yearly data | | G Glossary | | P Plot a Lovely Graph | | C Continue simulation | | | | R Return to Program's Main Menu | | H Help; X to Exit from program | ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Touching P plots a graph of your experiment that is similar in format to the historical record on the chart at the beginning of Chapter 2. Tapping S allows you to select any of four additional tables that will be described in this chapter. You can use the D key to direct the program to send the comput-er output to your computer's monitor for immediate viewing, to your printer for hardcopy, or to a disk file for future reference. After the desired out-put is generated, you may push R to return to the Main Menu for another simu-lation Here is the format of the second table of experimental output: Table #2: Economic Indicators: ECONOLAND Table #2: ECONOMIC INDICATOR$ ; Training Mission #1 DATE Wage% KapS WorkF PotGNP TaxRev GDeficit Gdebt GDP CPI 2001-1 6.2 1373 126 2196 414 301 2704 2111 175.3 2001-2 5.5 1396 127 2226 428 191 2751 2176 177.0 2001-3 5.8 1425 127 2259 441 132 2784 2244 178.6 2001-4 7.2 1458 128 2294 451 131 2817 2294 180.9 AVERAGE: UnEmp% = 6.4%; CPI% = 4.3%; EDI = 10.7%. EP SCORE = 201 points The various concepts presented on the table deserve a brief explanation; DATE Year for annual data or Year & Quarter (1991-2 is April-June of '91) Wage% Rate of increase in money wage rate (percent per annum). When unemploy- ment rises in Econoland, workers may be less successful at winning wage increases at the bargaining table, which may lessen inflationary pressure. KapS The Capital Stock. The stock of productive capital, measured in real terms, including factories, machinery, office buildings and houses. The capital accumulation achieved through investment activity will help to make Econoland workers more productive in the years ahead. WorkF TheWork Force. This concept, which is defined in Econoland as in the United States, includes all those aged 16 or over who are either working or looking for work (unemployed). PotGDP Potential GDP. This is an estimate, measured in real terms, of how much the economy is capable of producing when operating at or close to capacity --- it is the maximum sustainable output of the economy. Potential GDP depends in part upon variables that are not easily influenced, such as the rate of growth of the workforce and the pace of technological innovation. But current and past economic policies also influence the level of Potential GDP achieved at any particular point in time. If interest rates have been particularly high because the Fed has been moving aggressively to stem inflation, investment spending will have been curtailed, which will slow the growth of the capital stock which is so essential for an expanding potential GDP. TaxRev Tax revenue. The tax revenue raised by the government is used to pay for its spending on goods and services and to make interest payments on the national debt. Caution: the figures in this column can not be com- pared directly with the level of GDP, GOVT and other variables measured in real terms; they must be adjusted for inflation by dividing by the CPI. GDeficit Government Deficit (GOVT + interest payments on debt - TaxRev). Governments incur a deficit when the tax revenue collected from the pub- lic falls short of total expenditures on goods and services plus interest payments on the national debt, unemployment insurance benefits and other transfer payments. Gdebt Government Debt (Cumulative result of government borrowing). This is the total amount that the government has borrowed over the years --- it is the inevitable consequence of deficit spending. The GDebt figures are reported on the table in nominal rather than real terms, as is cusomary. The nominal data should be divided by the CPI before being compared to real GDP and other concepts that have already been adjusted for infla- tion. GDP Gross Domestic Product ~ Market value of economy's output, measured in real terms. CPI Consumer Price Index (measures the general price level) The EDI (Economic Discomfort Index) and the EPScore (Economic Policy Score) were defined in Chapter 2. Table #3 Survey of Current Business: This single table combines all the evi- dence presented on Tables #1 and #2. If your printer will print compressed (small) type, using this option will save paper by printing out on one sheet or the variables reported on both tables #1 and #2. As explained in Appendix I, the Setup menu's Configure Com-puter op- tion leads to a menu offering a procedure that will automatically set com- pressed type on many types of dot-matrix printers. Alternatively, it may be possible to set compressed type on your printer from its control panel. Table 4: Performance Evaluation: This table provides a convenient summary of how well a team has managed Econoland. ECONOLAND Table #4: PERFORMANCE EVALUATION Team #2 Entrepreneurs; League #1 National Exp³AVERAGES ³ FINAL QUARTER ³ EPScore Num³ unemp% CPI% Discom%³ Date GDP CPI RealGDebt³ Team #2 Pa Training Missions ----------------------------------------------------------- - 1 ³ 6.4 4.3 10.7 ³ 2001-4 2294 180.9 1558 ³ 201 435 2 ³ 9.7 2.4 13.0 ³ 2004-4 2829 190.3 1457 ³ 570 445 Total Score| 771 880 Preliminary EPQ (Economic Policy Quotient) = 100*(771/880) = 88 Challenges ------------------------------------------------------------------- 1 ³ 7.5 4.4 12.1 ³ 2008-4 3486 245.5 1920 ³ 975 500 Total Score: 975 500 EPQ (Economic Policy Quotient) = 100*(975/500) = 195 Each row of this table summarizes the results for a particular experiment. The first three columns report the AVERAGE level of several performance indicators over the entire period covered by the simulation. This is followed by data on how Econoland was doing in the final quarter. The next to last column reports the Economic Policy Score on each experiment, which is an overall evaluation of performance. Compare your score on each experiment with the "par score" re- ported in the very last column. A Preliminary EPQ Score is calculated on the basis of performance on the Train- ing Mission you have completed. The final EPQ Score, based on how the team's performance measured up when confronted by Challenging Shocks appears on the bottom line of the table. Table #5: International Financial Statistics: A convenient comparison of the performance of all the teams in the league that have played the selected ex- periment is provided by Table 5. ECONOLAND Table #5: INTERNATIONAL FINANCIAL STATISTICS Challenge #1: Normalcy League #1: National Par Score: 500 Team³ ³ AVERAGES ³ FINAL QUARTER ³ REPLAY HISTORY Num ³ EPScore³ Unemp% CPI% Discom% ³ Date Govt TaxR% ³ Modify Restart 1 ³ -500 ³ 9.4 10.0 19.4 ³ 2005-3 512.0 26.0 ³ 2 4 2 ³ 875 ³ 7.5 4.4 12.1 ³ 2008-4 591.0 18.0 ³ 9 5 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Team³ FINAL QUARTER Num ³ Intr% MoneyS MGR% CPI KapS PotGDP GDP Uemp% RealGdebt 1 ³ 17.2 1788 12.0 276.7 2044 2943 1991 30.6 1423 2 ³ 2.0 2842 28.5 245.5 2532 3486 3412 9.7 1920 The first team had a disastrous experience: Massive unemployment sparked a revolution --- the economic advisers as well as the President were forced to flee the country. On the basis of this miserable performance the team was awarded a penalty EPC score of -500! This table also reports how many "replays" the teams made on each experiment in the Modify and Restart columns. Clearly, Team 2's performance was way above par because they learned from experience through repeated experimenta-tion. Perhaps Team 1 will also try again. Chapter 5: Eight Challenging Assignments Once you have completed the four Training Missions you can put your macro planning skills to the acid test. The Econoland-2001 program offers eight cha- llenging assignments providing ample opportunity to test, rethink, and refine your economic policy making skills. Each experiment will start in year 2001; each assignment involves a challenging new scenario. To shift to your first Challenging Assignment, touch A while in the Main Menu. To move on to the next challenge, push A once more. Or select any of the other options listed on the menu. Challenge #1: Normalcy: For Challenge #1 you have the simplest possible as- signment: just restore normal economic conditions in Econoland --- put things right, after the disastrous years of the previous administration. Your job is to restore the economy to full employment without inflation. Lay the ground- work for prosperity in the 21st Century! Challenge #2: OPEC: In this scenario, peace and tranquility is interrupted by a drastic and unexpected increase in petroleum prices engineered by OPEC (the Organization of Petroleum Exporting Countries). The drastic hike in oil pric- es, similar to that which shook not only the US but the entire energy depen- dent world in 1973, confronts the policy makers with a particularly a diffi- cult choice: Option A: The Federal Reserve System can move to stop the inflationary pres- sure by tightening up on the cost of credit --- raising interest rates --- in order to slow down investment spending in new plant, factories, equipment, houses and consumer durables. But while high interest rates may slow the inflationary tide, they will also have the unfortunate side effect of generating insufficient effective demand for the nation's output. Thus the economy will suffer from a severe recession in the aftermath of the energy crunch. Option B: The Fed can move to offset the economic slowdown which is likely to follow the rise in prices generated by OPEC's shenanigans by expanding the money supply and pushing down interest rates. But while less unemployment will be generated by an expansionary policy, the Fed is likely to be blamed for having added to the inflationary fires by accommodating the OPEC price hikes with an enlarged money supply. Econoland's central bankers, confronted by the OPEC challenge, are likely to find themselves damned if they do and damned if they don't. Slowing down the economy will cause the Fed to be blamed for economic stagnation. Or if they stimulate the economy to avoid recession, they will be blamed for the infla- tion that follows. Challenge #3: WAR! The deteriorating international situation leaves Econoland with no option but to mobilize its military forces. The uncontrolled hike in government spending is likely to generate massive inflationary pressure. Your powers are limited because you no longer control government spending, which is dictated by military necessity. How seriously wartime mobilization will dis- rupt the economy depends in part upon how vigorously the Fed moves to stem the inflationary tide by holding the rate of growth of the money supply in check and hiking interest rates --- but the Secretary of the Treasury is concerned that higher interest rates will increase the cost of servicing the National Debt, thereby making the deficit even larger. Experts advise that the infla- tionary pressures will be less threatening if the massive increase in military expenditure is paid for with higher taxes rather than government borrowing from the banking system. Challenge #4: Peace: Peace at last; peace for all time! But demobilization may be far from easy. What will happen to the economy now that the military industrial complex has lost its mission. Can defense plants convert to the production of civilian goods and compete in the marketplace?. Will the cut back in government spending dictated by the peace treaty make it difficult to convert from swords to plowshares? Demobilization will not be easy, in part because the peace treaty will prevent you from manipulating the level of gov- ernment spending. Will appropriate tax adjustments coupled with judicious mon- etary policy provide enough stimulus to meet the shock of massive cutbacks in the pace of government spending? Challenge #5: Automation: The automation option accelerates the rate of growth in output per worker. Will automation of the production process mean that wor- kers will suffer from technological unemployment, their jobs being taken over by robots? Since the very beginning of the Industrial Revolution, workers have tried to hold back the tide of progress by attempting to force their employers to keep everyone on the payroll and by limiting the rise in output that techno- logical change facilitates. Never the less, technological progress makes a positive contribution to economic well-being: the development of new and improved techniques of production, by increasing worker productivi-ty, provides an opportunity for the more rapid growth in real wages and a higher level of output for the average worker. Challenge #6: Productivity Slowdown: If it were true that increases in worker productivity made massive technological unemployment inevitable than it would also be true that a slowdown in the rate of productivity growth would be a blessing. But that is not what happened in the United States where a slowing down in the rate of productivity growth since about 1973 has meant that the standard of living is no longer subject to continued improvement. Since about 1973 the United States and, indeed every major industrialized country, has ex- perienced a drastic slowdown in the rate of growth in worker productivity. Can the slowdown be partially offset by a policy of low interest rates coupled with tighter control on government spending in order to release resources for addi- tional investment? Challenge #7: Designer Experiments: When you undertake this challenge you will be faced with a new menu offering a wide choice of shocks which you can mix and blend in imaginative combinations in order to construct your own ex-citing mix of challenges. You can choose War or Peace (Shocks #3 or #4). Or you can rise to the occasion by simultaneously taking on both OPEC and the Slowdown in the Rate of Productivity Growth (Shocks #2 and #6). For still more of a challenge, make it a triple by adding War to the OPEC and Slowdown challenges. Challenge #8: Random Shocks: For your last challenge the mix of shocks will be determined randomly by the computer. Surprise! You won't know which set of challenges will confront you until the news headline flashes a warning on the screen. Appendix I: Technical Information 1. Set Up Options: The Econoland-2001 program contains a number of Set Up options that you may use to add new Leagues and Teams and refine the operation of your computer. Pushing S on the Main Menu presents you with the following options: ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ | SETUP OPTION MENU | | ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ | | A Add New League | | N Add New Team; T Select next Team | | | | D Edit League Description | | E Edit Team Description | | | | O Configure Computer Options (Monitor Display, etc.) | | | | R Return to Main Menu | | H for Help; X to eXit | ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ As explained in the Help menu, the first several options allow you to add Leagues and Teams and/or edit the names of participants in existing teams. For example, touching E provides you with the chance to edit the name of the incum- bent team: ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ | Edit name of team number 1 | | Incumbents______________________________________________________________ | EDIT OPTIONS: DELETE clears the string; BACKSPACE removes last character; | | touch ENTER (RETURN) when finished; ESC leaves string unchanged | ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ There are two additional unprompted options: Touch T to change the active Team; if there is more than one League, touching L will shift to the next League. The Information Box at the bottom of the screen will keep you posted as to the current selection. The O option takes you to the Configure Computer Option Menu: ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ | COMPUTER CONFIGURATION OPTIONS | | ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ | | | | S Sound: ON | | I Printer Initialization String: Epson or IBM Proprinter | | M Fine tune program to improve display on your Monitor | | | | H Help; X to Exit from program | | R Return to Previous Menu | ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ S This option turns off sirens and beepers, which may reduce both excitement and stress. I If you have an Epson or IBM Proprinter compatible dot-matrix printer at- tached to your computer, this option can be used to automatically send your printer a command string that will make it start up in compressed type (e.g., 17 characters per inch) in order to accommodate Table 3, the Survey of Current Business computer output generated by ECONOL. If you on't set this option (or if it doesn't work on your particular printer), you may be able to set your printer to compressed type by hand each time you run the ECONOL pro- gram. Alternatively, you can use Tables 1 and Tables 2, which together contain all the data consolidated on Table 3. MThis option takes you to a menu which allows you to adapt the colors that the computer selects in order to improve your computer display, whether it has a VGA, EGA, CGA, Hercules, or standard monochrome monitor. 2. Monitor Adjustments: ECONOLAND automatically detects whether you have a color (or grayscale) or a monochrome monitor. If you have a color moni- tor, it will assign particular colors to different types of messages and text strings. If you have a monochrome monitor, it may try to use low versus high video dis-play and inverse video. There are four different types of strings displayed by the ECONOLAND program: Default, Message, Prompt, and Warning. These may be sharp and clear on a VGA monitor, but they can be improved on some other com-puter/monitors, such as an ATT 6300. When you select the M option on the Setup Menu, you will be pre- sented with the following menu: ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ | COLOR INSTALLATION OPTION MENU Color (or Grayscale) Monitor | | ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ | | | | H Help and Instructions | | ReSet the colors of the following strings Fore & Back | | D Default String, used most frequently 0 3 | | M Message String, a more prominent statement 14 1 | | P Prompt String, it should grab your eye 14 3 | | W Warning String, look out! 14 4 | | L Load colors from MONITOR.CFF file | | S Save these new colors for future use | | I Install Default Colors | | R Return to Previous Menu; X to Exit from program | | | ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Before proceeding, adjust your monitor's CONTRAST and BRIGHTNESS knobs in order to finetune the display. Next, push the letter on the Color Installa-tion Op- tion Menu corresponding to the type of text string you wish to improve; the computer will respond with a Set Screen Color Display presenting a Color Pal- ette showing the colors your computer can display. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ | Set Screen Color | | This is the Color of Your String ( 0 3 ) | | ~~~~~~~~~~~~~~~~~~~~ Color Palette ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ | | | | 00 10 20 30 40 50 60 70 80 90 100 110 120 130 140 150 | | 01 11 21 31 41 51 61 71 81 91 101 111 121 131 141 151 | | 02 12 22 32 42 52 62 72 82 92 102 112 122 132 142 152 | | 03 13 23 33 43 53 63 73 83 93 103 113 123 133 143 153 | | 04 14 24 34 44 54 64 74 84 94 104 114 124 134 144 154 | | 05 15 25 35 45 55 65 75 85 95 105 115 125 135 145 155 | | 06 16 26 36 46 56 66 76 86 96 106 116 126 136 146 156 | | 07 17 27 37 47 57 67 77 87 97 107 117 127 137 147 157 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ You use the arrow keys to select the desired color. If you have a color monitor, your PC will assign colors by the numbers; for example, number 14 is yellow and 4 is red, which means that color number 14 4 on the color matrix will display on a color monitor as yellow on red. On some monochrome monitors certain squares on the Color Palette will display as inverse while others may not show at all! Use the arrow keys to change the "color" number of the string in order to improve the quality of the display. Push when finished selecting the best display for your string. To save these colors so that they will automatically be installed each time you start the ECONOLAND program, just tap S. Or, if your efforts made things worse, you can restore the previous setting by touching S or the default col- ors by touching I. 3. Printing Graphs: You are not alone if your dot-matrix printer does not respond by printing out a nice hard-copy graph. You had obtained the graph on your screen by touching P while in the Output menu; then you pushed the D op- tion when the graph of your Macroland experience was displayed on your moni- tor; and the output on your dot-matrix printer was garbage! The problem is that there are 100's of different dot-matrix printers out there --- the D op- tion works on many but by no means all of them. For example, the option does work on the Panasonic KX-P1124 and the Epson FX85; it fails on the older Epson MX printer. The problem usually arises because your particular printer does not use the control code that this option sends to your printer in order to put it into "graphics mode." There are three possible strategies that you can employ: a. Experiment with an alternative unprompted graphics option available when the graph is displayed on your monitor in the hopes that one may work on your printer: Instead of responding with a D when prompted, try pushing 5; if that doesn't work, try 6. b. Use the MS-DOS command GRAPHICS. You invoke this command BEFORE enter- ing ECONOL by typing [drive:][path]GRAPHICS where [drive:][path] may be required to indicate the location of the GRAPHICS.- COM file; e.g., B:GRAPHICS or C:\DOS\GRAPHICS. When you have started MACROLAND and obtained on your screen the graph you wish to print, push Print-Scrn. Be forewarned, however, that this MS-DOS command does not function properly with all hardware. Various options for the GRAPHICS command are specified in the Dos Manual that came with your computer. c. If you use a recent version of WordPerfect, use the included GRAB utili- ty to "capture" the graph when it is displayed on your screen and store it in a file that can be retrieved into a WordPerfect document. See the WordPerfect manual for details. 2. TECHNICAL STARTUP OPTION: Adding MONO at the end of the command string forces the program to start up in monochrome mode regardless of how the com- puter is equipped; e.g., type ECONOL MONO instead of just ECONOL to start up the program on a two floppy drive computer. 3. DIRECTORY\PATH TO FILES: Ordinarily, the program will identify the ap- propriate directory area containing the required files. The program first looks for ECONOL.HST. If this file is not in the default directory area when the program is started, the user will have the option of either changing the Drive\Directory or exiting from the program. 4. FILES USED BY ECONOLAND-2000: The following files will be created in the course of running the ECONOLAND program: ECONOLAN.CLS List of Leagues ECON0g.CLT List of teams in League g. ECON0g0t.TEA One file for each team, which will contain records summarizing the results of each simulation. ECON0g0t.E0x One file containing results of experiment x by team t in league g. ECONO-0n.OUT File of output sent to disk from the Output Menu. Files are numbered consecutively (n). MONITOR.CFF Contains the color settings for the monitor and other setup options. 5. MEMORY MANAGEMENT: ECONOLAND accumulates a number of files in the course of conducting experiments on a number of teams. In order to limit the amount of disk space the program uses, you may want to delete certain files from time to time. To start afresh, two-floppy disk drive users should create a new Data Disk (Chapter I.1, Step 1); hard disk users should delete all files in directo- ry area C:\ECONO\TEAMDAT and then enter C:\ECONO\CTEAMDAT. Alterna-tively, the following files may be deleted without interfering with subsequent experiments with the existing team setup: ECONO-0n.OUT Files of table output may be deleted if no longer needed. ECON0c0g.TEA File used by Tables #4 and #5 ECONOl0t.E0X File recording experimental results. Do not delete file ECONOl0t.E01 until the 2nd experiment is played. Simi- larly, delete ECON0l0t.E02 and ECON01pt.E03 only after the subse- quent experiment is executed. As mentioned earlier, on a two-floppy disk computer it is best to keep each League on a separate floppy disk. Appendix II: Group Activities Classroom: ECONOLAND-2002 can be used effectively for classroom instruction. One strategy is to partition the students into groups of two to five students, with as seven to ten teams in a League. Each group is given an Economic Pre- scription Blank on which to enter its government spending decisions for the first year; the team also decides on the office that will be held by each stu- dent participant and the name they have chosen for their team. The instructor then has the information entered into the computer and at the next class meet- ing distributes a detailed printout to each team and the summary information provided by Table #5. This procedure provides a vehicle for discussing the effects of alterna- tive policy actions on the economy: Which team did best and why? Why did some teams get into difficulty? Was the advice of expert economists helpful --- should presidents consult only one expert to avoid confusion or get a "second opinion"? Observe that some teams did more harm than good, doing worse than a policy of "No Change" (entering the default option each time) --- does this imply that discretionary policy should be avoided? Perhaps some teams will do worse on Training Missions #2 and #3 then they did on Training Mission #1, sug- gesting that the privilege of setting tax and monetary policy may lead to coun- terproductive results. New prescription blanks can be used to enter decisions for subsequent rounds. Alternatively, if the computer equipment is readily available, stu- dents can be encouraged to enter their own decisions, either during a class session, a section meeting, or on their own time. The Network Version of the Econoland program allows students to enter decisions from a variety of different computers. The results are readily sum- marized by generating Table #5, which provides a consolidated overview of the achievement of the various teams for discussion with the entire class. Tournaments: The Economic Policy Score (Tables #1 and #5) and the Economic Policy Quotients (Table #4) provide ready yardsticks for ranking the perfor- mance of competing teams. League champions can challenge star performers in other leagues to a runoff competition. Appendix III: Bugs, Ordering Ordering and Registration Information: ECONOLAND-2001, a "shareware program," is provided at no charge to the user for evaluation and testing for a brief trial period --- 5 day maximum. If you find this program useful, educational, enjoyable and/or fun please send a registra- tion payment of $50 to Lovell's ECONOLAND 63 Carriage Drive Durham, CT 06422 Upon receipt of payment, you will be sent a personalized copy of the latest revision of the program and a printed copy of the program's documentation. Specify 3 1/2 inch disks if this format rather than 5 1/4 inch is desired. The registration fee will license one copy for use on any one computer at any one time. Write to the above address for information about licensing the pro- gram for classroom use, site licensing and network applications. THE SHAREWARE CONCEPT --- Try before you buy! The Shareware distribu-tion concept is based on the Honor Principle. Shareware has the ultimate money-back guaran- tee -- if you don't use the product, you don't pay for it. Feel free to pass copies of the original ECONOLAND-2001 Program and Documentation disks along to interested friends for evaluation. Please encourage them to register their copy if they find they can use the program. COMMERCIAL DISTRIBUTION: Anyone distributing ECONOLAND-2001 for any kind of remuneration must first contact Lovell's ECONOLAND at the above ad-dress for authorization. However, distributors recognized by the Association of Shareware Professionals as adhering to its guidelines for shareware dis-tributors, are authorized to begin offering ECONOLAND-2001 immediately. Bug Reporting: Information about the precise location in which a bug was en- countered and any error messages displayed on the screen will help in locating the source of the difficulty. Please also report the version number of the operating system; a listing of your CONFIG.SYS file and of your AUTOEXEC.BAT file may be of assistance in determining the cause of idiosyncratic problems. Example: A user reported that the program hangs or crashes with a report of "Dos Error 4." When this information was reported to a computer hacker, she determined that Dos Error 4 arises because the computer was not con- figured to open enough files simultaneously. The remedy for this prob- lem is for the user to add the line FILES=20 to the CONFIG.SYS file on the computer, as explained in the MS-DOS manual. Please report your suggestions for improving the program as well as informa- tion about any bugs you have encountered in running this program to the above address.