Federal Reserve Chairman Game Reflection

In: Business and Management

Submitted By srandmmiller
Words 336
Pages 2
The Federal Reserve Chairman Game is very interesting and does a great job of illustrating how the monetary policy is used to promote economic growth and stability. The game shows how the federal funds rate affects unemployment rate and inflation. The goal of the game is to control the interest rate so that it keeps the inflation rate and unemployment rate within the acceptable range. It is very difficult to make the proper changes to the interest rate because just as in real life they take a couple of quarters to start affecting the economy. It is necessary to look at the general economic stability and ongoing situations when making the adjustment to the federal funds rate (interest rate); However, In the game as in real life it is impossible to anticipate unforeseen circumstances that may affect the economy, such as natural disasters, wars, etc., which makes it very hard to always adjust the federal funds rate (interest rate) in a way to counteract the effect they may have. These drastic changes can affect the economic stability by causing major increase in the inflation rate and unemployment rates which increase the risk of failure to the industry, businesses, our government, and to the citizens of the country. I played this game a total of 7 times and was dismissed the first 6 because I could not control the monetary policy and keep the inflation rate and unemployment rate satisfactory. On my 7th attempt I was finally able to understand the importance of small adjustments to the rate, giving the change time to show its effect on the inflation and unemployment rates, and how to use the information from the paper to assist me when making my adjustments to the federal funds rate. I was finally able to be reappointed after 28 years (16 quarters time 7 tries). If it takes that long in real life to figure it out, then it is no surprise why the economy in this…...

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