Fed Chairman Game Essay

Topics: Inflation, Monetary policy, Federal Reserve System Pages: 1 (319 words) Published: April 26, 2015
Federal Reserve Chairman Game and Reflection Essay
The Federal Reserve Chairman Game demonstrated how the monetary policy is implemented to stimulate economic growth and keep it stable. The game shows the impact of federal funds on the unemployment rate and inflation. In the game, we are aimed to control the interest rate in order to keep the inflation and unemployment rate within an acceptable range. As in real life it takes a long period for the changing interest rate to affect the whole economy, it is difficult make accurate change to the interest rate. Furthermore, when making change to the interest rate, it is needed to refer to the economic stability and the current situation. In the real life, it is hard to anticipate the unforeseen circumstances that effect the economy, such as the wars and natural disasters, which makes it tough to adjust the interest rate to reduce the effect. These unforeseen circumstances can cause the increase in the inflation rate and unemployment rate, which negatively impact the industry, our government, and everyone in the country. I played this game three times, and for the first two times I was not able to control the monetary policy and keep the inflation and unemployment rate within the acceptable range. However, on my last attempt, I understood that every small adjustment count. I was able to control the federal funds rate. Additionally, in order to keep the inflation rate stable around 2% and unemployment rate low, the Fed is needed to control the supply of money. For these circumstances, the Fed rate need to be around 4.5%, which should be revised every three months for the following four years. I didn’t get reappointed because I was unable to control the monetary policy in two attempts. The monetary policy helps to change the high inflation rate and unemployment rate of the country, thus, helps to promote the economic growth and stability.
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