The Virtual Economy home page provides a model of the British economy in which you can play the role of Chancellor, the person who helps determine levels of taxation and spending in Britain. Go to its home page at www.bized.ac.uk/virtual/economy and answer the following questions:

a. Visit the Chancellor's office on the ground floor. What are the four key economic targets?

b. What are the main policy tools at the Chancellor's disposal? Provide a brief description of each.

c. Find the economic model on the fourth floor. Use the model to predict what will happen to each of the policy targets within the first three to four years if income taxes are raised 9 percentage points. Report your results.

d. What does the model predict will happen within the first three to four years if government spending is in creased 10 percent?