Fed Chairman Game Essay Example | Topics and Well Written Essays - 500 words

Fed Chairman Game - Essay Example The purpose of this paper is to discuss the results of the â€Å"Fed Chairman Game.† In the game the player must choose the fed interest rates for period of four years or 16 quarters. The player must keep inflation and unemployment below 4 and 7 percent respectively. The logic that must be used to make decision is that you can lower inflation by setting federal funds well above the inflation rate, but doing so will also push unemployment upwards. You can lower unemployment by pushing up inflation by setting the federal funds rate close too or below the inflation rate. Throughout the game after each decision there is a newspaper headline that reports what is occurring in the economy based on the Fed decisions. The news must be used by the player in order to make decisions. The table below has a list of some of the newspaper headlines that I saw during the game. During the simulation I utilized the news as a point of reference to make decisions. I had to look at the impact my decisions had on inflation and unemployment at all times. The actions that I took to get reelection were geared at maintain the general public happy. I ran the simulation three times and I was not able to get reelected. The job of the chairman of the Fed is very hard. During the first two runs I was not able to keep inflation low enough to get reelected. During the third run I messed up as far as having negative inflation or deflation. I learned from the simulation that monetary policy is extremely important for the well being of the United States. People are happy with their government when there are jobs available in the marketplace and when their money has good purchasing power. Inflation decreases the purchasing power of the US