B2. Answer the following questions: Create a model using Vensim software

a. What kind of feedback loop is created in your model?

b. What is the initial deficit (given the base case parameters)?

c. How long does it take for the deficit to double?

d. How long does it take the deficit to reach $1 trillion/year? 2

e. What is the relationship between the doubling time and the interest rate? (To discover a relationship, you may want to simulate with extreme interest rates say, 3% per year and 15% per year).

f. How does the time horizon (the length of the simulation) change the apparent shape of the curves? Why?

i. To answer the question on time horizon, you need to look at your simulation over different periods of time. You can run the model once with a long-time horizon (e.g., 100 years) and then change the time range viewed in graphs and tables. Select Time Axis from the Control Panel dialog box to change the time frame displayed in graphs and tables (see The Control Panel in the tutorial or Users Guide).

ii. Vensim allows you to load multiple runs (or datasets) and then view the output of different runs in the same graphs and tables. For example, each run can make use of a separate interest rate. See The Control Panel in the Users Guide for details on selecting datasets. g. Hand in your model (diagram and equation listing) and answers to the above questions. You need not hand in plots, but you should describe how you arrived at your answers.