The second section then suggests different policies that could be tried out on the Virtual Economy. Students can explore the impact of each tax on GDP growth and employment opportunities. They can also look for the effects on incomes of different types of households. This can lead to an assessment of the effects of specific taxes on particular market segments. Element 5.3 calls for description and evaluation of government strategies to improve competitiveness.
Students can examine the impact of interest rate changes on output and inflation.
They can explore the way low interest rates foster growth, which may also increase competitiveness. Equally they can see how high interest rates might reduce aggregate demand and economic activity. GNVQ students often find the terminology of fiscal and monetary policy rather daunting. By getting involved in the decision taking process they will have the chance to think in depth in a supportive environment which will aid comprehension. They can refer to the glossary for help with jargon, playing with the possibilities and gradually absorbing the complicated reality.