ECONOMICS TEACHERS’ GUIDE

SECTION: MACROECONOMICS
EXAM LEVEL: A LEVEL
QUANTITY THEORY OF MONEY SIMULATION
Round 1
• Divide the class into two equal teams. If the class has 10 learners, 5 of them will play the role of
'producers' and the other 5 will be 'consumers'. Each member of the producer team is given 1
commodity (e.g. a pencil) and each member of the consumer team is given £1. Learners are instructed
to observe some rules (e.g. the consumer side must spend all of its money).
• Allow the 2 teams to exchange commodities for money. Provided the teams obey the rules the market
price for the commodity should be £1. Ask the learners to calculate the values for M, V, P and Y (it
should be M=5, V=1, P=1 and Y=5).
Round 2
• Provide the 5 'consumers' with £2 each, but each producer still only has 1 pencil, the market price
should jump to £2. Again ask the learners to calculate M, V, P and Y (it should be M=10, V=1, P= 2,
and Y=5).
Round 3
• The arrangement is slightly different, but the intention is to get learners to really understand what 'V' is.
• Split the class into 3 groups: i) consumers, ii) pencil producers and iii) mug producers. Consumers
have £1 each and are instructed to buy pencils from the producers.
• Pencil producers will, in turn, spend their money on mugs. All producers still only have 1 item to sell.
• Provided learners stick to the rules, the market price for pencils will be £1 and the market price for each
mug will also be £1.
• Ask the learners to calculate the values for M, V, P and Y (it should be M=3, V=2, P=1 and Y=6).
USEFUL INTERACTIVE RESOURCES
WJEC > A level Economics > Specification from 2015
WJEC > A level Economics > Specimen Assessment Materials