← All simulatorsA NEW LENS ON THE ECONOMY

Macroeconomic Policies

Compare how monetary and supply-side policies affect spending and productive capacity.

MANAGE DEMAND

Monetary Policy Simulator

Change interest rates, trace the spending response, and see how the economy’s starting point matters.

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BUILD CAPACITY

Supply-Side Policy Simulator

Explore 14 policies and see why education, investment, and market reforms take time to work.

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DEMAND OR CAPACITY?

Compare the policy approaches

Compare	Monetary policy	Supply-side policy
Speed	Usually faster to change; effects still take months or longer.	Often slower; skills, infrastructure, and technology take time.
Main effect	Changes aggregate demand through interest rates and spending.	Changes productive capacity and SRAS and/or LRAS.
Common use	Demand-pull inflation, recession, and weak aggregate demand.	Productivity, structural unemployment, and long-term growth.
Possible downside	Trade-offs between inflation, growth, and unemployment.	Can be expensive and slow; effectiveness is uncertain.

Monetary policy: the spending channel

01Monetary policy
02Interest rates
03Consumption and investment
04Aggregate demand
05Price level, real GDP, and employment

THE POLICY SCENARIO GAME

What Would You Do?

No single score. Explore the consequences of each choice.

Choose a situation

HYPOTHETICAL SCENARIO 1 / 4

Inflation is 7%, unemployment is low, and consumer spending is increasing rapidly.

Expansionary monetary policyContractionary monetary policySupply-side policyDo nothing

THINK THROUGH THE TRADE-OFF

What would your policy change?

Select an approach to explore its likely consequences. Try alternatives, including doing nothing, before deciding what you would recommend.

Combining policies

Multiple policies can sometimes be used together. Your recommendation depends on the cause of the problem, spare capacity, expectations, time lags, and the trade-offs society is willing to accept.

KEY TERMS · HOVER, FOCUS OR TAP