## 3 Model Overview
### Basic Behavior of the Model  
The basic behavior of the above model is described below. Figures 2 and 3 indicate the results of the simulations without \(BI\), with \(a=-0.02\), \(m=20\), and \(\gamma=50\). The graph depicts the averages for each of the 12 periods in order to improve visibility.  
As depicted in Figure 2, GDP and average product prices fluctuate up and down cyclically. Notably, the rise and fall of the average price lags behind GDP and is able to reproduce one of the stylized facts [52] that show that prices lag behind economic growth. In this model, production volume also rises and falls in response to demand, as indicated  
Figure 3: Time series of production volume and average price.  
Figure 2: Time series of GDP and average price.  
in Figure 3. It should be noted that the vertical axes of both Figures 2 and 3 represent the monetary values as defined within the model. In the short term, firms use excess production capacity in tandem with price adjustments, and when firms determine that they still cannot meet demand, they respond by making capital investments. The production volume shows a gradual increase in the minimum. Meanwhile, the GDP and prices gradually decline with the repeated ups and downs. This happens because this model is a closed system, which means that the number of products in the market increases relative to the beginning of the simulation due to increased production capacity through capital investment; the model is a closed system and does not have population growth, trade, or other system expansions or transactions with external systems.  
This business cycle is caused by the following sequence of events.  
1. Firms with a relatively strong competitive advantage in the market are unable to keep up with supply.
2. Firms with competitive advantages borrow money from banks to make capital investments, which increases the amount of money flowing through the market.
3. An increase in the quantity of funds improves household income and increases the demand for the products of the separate firms.
4. Capital investment by separate firms creates a chain reaction of borrowing, increased capital circulation, and a cycle of capital investment.
5. As capital expenditures run their course, the market is dominated by the repayment of funds rather than borrowing.
6. As the funds begin to deplete the capital circulating in the market as the loans are repaid, a cycle occurs in which demand falls, prices fall, and wages fall.
7. When the repayments reach their full maturity, a cycle of capital investment is generated again due to investment by the firms with competitive advantages.  
In the economic models in which the above emergence occurs, there are changes in the work motivation, as indicated in Figure 4. The figure presents the percentage increase in GDP, cash, and deposits of all the households; the average of all the households' work motivation, each averaged over one 12-period interval; and the percentage increase in the current period relative to the previous one. The cash and deposits of all the households increase and decrease in line with the growth rate of GDP. As for work motivation, we see that it is increasing and decreasing behind even these households. This is because as GDP rises, the feedback of the economic boom to households and the resulting disparities increase their work motivation, and as the economy slows, the motivation declines as income inequality shrinks.  
Figure 4: Households’ total cash and deposits, percent change in GDP, and average work motivation.