Demonstrating the Effects of Monetary Policy and Technological
Change: A Classroom Experiment John F. R. Hunter and Thomas G.
Watkins This paper presents an in-class exercise illustrating
the effects on output from changes in the money supply and in
input productivity. The exercise is designed for an introductory
economics course enrolling students with limited exposure to
macroeconomic theory. The students play a modified version of
the circular flow game (Watts et al., 1998) in three rounds. The
first round establishes the nominal and real GDP for a given
money supply and technology. The second round demonstrates the
effect of increasing the money supply, while the third round
demonstrates the effect of increased productivity. Results from
class play are also discussed.