Interest rates and the price of bonds: The monetary transmission mechanism

It is becoming increasingly difficult to instill good study skills along with a solid foundation in economic principles in first year students.   The on-line simulations were developed to complement as well as provide an alternative to straight book work in an effort to spur interest, understanding and grades.  Today, students prefer computers and on-line resources to more traditional books and journals.  With a dwindling manufacturing sector, a university degree has become a necessity rather than a privileged option.   Marginal students need to be saved from themselves, learn the value of hard work and increase their effort in order to succeed at the university level. 

In an effort to provide students with more and diverse resources, I have developed two additional simulations for macroeconomics. The first simulation is to describe the three motives for holding money and their association to the inverse relationship between the interest rate and the price of bonds.  Students do seem to have some difficulty with this concept and it tends to be a highly tested concept.  This was my motive in developing this resource. The second simulation revolves around the monetary transmission mechanism which is integral in creating an understanding of the process within the money market and how its effects are transmitted to the goods or output market.  It is important for students to understand the interrelationships between the two markets.

The simulations begin with a discussion of the graphs, their relationship to each other, the outcomes of these relationships, and the general effect on the economy.  Included in these very interactive simulations are a glossary of terms and hot spots which relate back to the terms as they appear within the simulation.  These simulations are placed on a web site which may be accessed at any time of a student’s choosing.