Check out this game created by the Federal Reserve. It deals with exactly what we are studying right now, monetary policy. The game puts you in the position of the Fed Chairman, and you must manipulate interest rates in order to balance unemployment and inflation. Click on the learn more button before playing. Investigate the Fed Toolkit and the other items in the help section. After this play the game. Give me a short summary of your strategy and how it went.
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When playing the stock market game, i realized that lowering the federal reserve amount will increase inflation as less money in circulation will result in higher interest rates on loans. In contrast, more money in circulation will decrease inflation because the money is weaker in comparison to previous times. When the inflation rate began dropping, I would decrease the federal reserve number 1 to 1.5 units, and wait and see if it brought about the desired change. If the inflation rate rose, then i would increase the amount of money in the federal reserve by 1 to 1.5 units. I ended up getting reappointed as Chairman the third time I played the game.
The strategy for the game was one discovered by the process of guess and check. One thing I've learned is that the amount of money in the Federal Reserve and the amount of money that is currently in circulation is inversely reltaed. The more money being spent, the less inflation there is. Whenever inflation began to decrease, I lowered the federal reserve number marginally. If inflation began to rise, I would increase the federal reserve number marginally. After four tries, I was appointed as Chairman again.
While playing the game i realized just how delicate money flow really is. When the amount of money in the federal reserve is high interest rates are as well, when the amount of money in the reserve is lower the interest rates are also lower (so that people will borrow). When playing the game i sort of just played around with it and guessed at when to o based on the factors of inflation and unemployment and was appointed Chairman.
While playing the Federal Reserve Game, I learned a couple of things. Small maneuvers such as increasing the federal reserve amount from 4.50% to 5.00% can provide a lot of change in unemployment and in inflation. As more money was being spent in the system, the less the inflation percentages were. After 3 tries, I was appointed Chairman. It took a lot of guessing and checking as well as recognizing what to do in deflation and inflation.
For the record I was pretty bad at this game. I tired to keep unemployment a little below the normal rate, and leave the inflation rate a little higher than normal. Although my strategy failed me, I do however have a better understanding of when lowering the federal reserve amount it increases the inflation rate. While less money is in circulation causes higher interest rates. On the other hand, when more money is in circulation inflation starts to decrease because the money value is much lower than it previously was. Sadly enough I played the game four times and still got fired.
Well..i'm not that good at this game..I was doing well initially, but then towards the end of the game i screwed up. The inflation won't stop raising, so i raised the fund rate slowly to 10%(about 1 to 1.5 each time), that did cut the inflation, but also made unemployment shoot up from 3% to 5%. Although the reason I lost was still because of the inflation. I ended up at 3.8% inflation...I ran out of time bringing it back down because I was too focused on the unemployment rate
When I first began playing my thinking was to just watch the graph and see how things play out. But, as the months started to pass I realized that by checking how my decision, whether making the federal reserve amount higher or lower, and how that effected the way unemployment and inflation rates would drop/rise. So, in the end, when inflation was high, I raised the amount by about 2% above the normal rate, and when deflation was a concern I did the opposite. It seemed to work well for me. After about four tries I was appointed Chairman again.
While playing the game, I learned that the best strategy was to lower the interest rate during deflation to promote the growth of the economy. I also learned that raising the interest rate would cause the value of the dollar to increase, therefore reducing the net exports. This would hurt the industries and unemployment rate might rise. Moreover, I learned that I should not increase or decrease the interest rate abruptly. I also could not raise it too high or too low. After three times I got reappointed as the Chairman.
After my first time playing the game, the unemployment rate was too high and the inflation rate was too high too. Then I decided to read the learn more tab. As Federal Chairman, I then learned to adjust the federal funds rate so both rates would remain normal and constant. The secret is first, I set the federal funds rate relatively higher than the inflation rate, and then I set the rate closer to the inflation rate. I alternated between high and low after each quarter, and doing so kept the rates normal and I was appointed as chairman.
When I first started out with the game, the instructions didn't make much sense to me. The difficulty of this game is harder than I expected. When I kept the inflation rate low the unemployment rate seemed to go higher than predicted. When the unemployment rose, I just lowered the federal funds but the inflation rate started to rise slowly. At one point of the game I managed to get the inflation rate and the unemployment rate on the dotted line where it should be at. I got too over confident and made the mistake of raising the federal funds which impacted the economy for the worst. It made the both the rates rise higher than before and destroyed the economy.
My strategy for the game was to really focus more on the unemployment rate than the interest rate. For the first few months, I kept the federal reserve amount at about 4% - 4.5%and the economy was relatively stable. After unemployment started to rise, I put the federal reserve amount at 2.5% and unemployment fell while interest rates grew a little. This game made me realize how decisions about monetary policy could take sometimes more than half a year to become effective.
When the amount of money in the federal reserve were high interest rates were also high. The strategy was to lower the interest rate during deflation to promote the growth of the economy. When I kept the inflation rate low the unemployment rate went up.
When I played the game, I realized the best thing to do is to focus on the unemployment rate. The consequence of increasing the federal funds rate to decrease the inflation rate was unpredictable. Even when I increased the fund rates, the inflation rate kept soaring. However, keeping a stable rate helped to stabilize the rate of unemployment between 3-5%. Inflation rate on the other hand was out of control.
When playing this game, my strategy was to keep the federal fund rate at a relatively low percentage. Then whenever I see either the inflation rate or the unemployment rate beginning to move beyond the desired percentage, I word readjust the federal fund rate accordingly. Whenever I saw an insignificant increase or decrease, I try to raise or decrease the fed rate to attempt to stabilize either one as well. After several tries, I unfortunately never made Chairman.
I had to play the game multiple times before finally getting it right. The more money that was being pent during the game, the more the inflation dropped. When inflation finally began to drop, I also dropped the Federal Reserve Number to keep it stable. As inflation rose, I increased the Federal Reserve Number to balance out the equation again.
Lauren Swindell, 4th Period
When I played the game, I initially paid more attention to the inflation rate than unemployment. In hindsight that was probably not a wise decision. Also, the first time I played I was a bit too eager to manipulate the discount rate. In the end I did a pretty bad job and got fired, but the second time I played I approached it differently. I set the discount rate higher to start, and then let the economy go on its own for most of my term. In the end I was reappointed.
Honestly I began to play the game, everything I did just made things worse. So when I played again, I just focused on the unemployment rate. So whenever there was an inflation or deflation, I just adjusted the federal reserve to keep the unemployment rate around the 3-5%.
While playing the game, I figured out that the best thing to do was to reduce or increase interest rates according to the situation. I learned that it is not a great idea to change these rates too quickly. I also learned that by raising the federal reserve ratio, the money supply would decrease, which would in turn increase the interest rate because the demand for money had gone up, and vice versa. I was appointed Chairman after four tries. Playing this game gave me slight understanding of how complicated it is to regulate the economy.
While playing the game I understood that if you want to lower the interest rate you would have to increase the federal reserve amount. I also understood that if you wanted to lower the unemployment rate you would have to decrease the federal reserve amount below the current inflation rate or close to it. When you try to bring down something, something else goes up and then you are trying to bring that down while something goes up again. The problem that happened when I was playing the game was that I would severely increase or decrease the the federal reserve amount when something happen to the inflation rate of unemployment rate. I played the game 5 or 6 times and I still got fired.
When I started playing the game, I was doing pretty well. I adhered to the instructions, and whenever the inflation rate went up, I increased the federal funds rate. Whenever unemployment was high, I lowered the federal funds rate. When the interest rate was too low, I also lowered the federal funds rate (close to the inflation rate), and when unemployment was too low, I increased the federal funds rate. However, as time progressed, I began to not have as much control. The inflation rate started going up. This was partly my fault because initially I was doing so well that I did not bother to respond to the newspaper headlines. It eventually got so bad, that I ended up getting fired (the inflation rate was like around 6 percent).
The first time I played I rashly adgusted the rate and made big jumps(i.e. 1.0 to 7.0) but I learned to make smaller changes overtime. However, just when I thought things were going well, deflation struck and unemployment rose. I got fired, but I eventually learned to pay close attention to the tips and act on every report accordingly. I was finally reappointed chariman the tird time around.
Whilst playing the Federal Chairman Game, I realized how delicate and fickle the money supply really is. Simple changes to percentages such as to the federal funds rate by even a quarter of a percent changed the money supply and unemployment rates quite a bit. The first game was a complete failure, but I learned a lot through the guess and check method to get my feet wet. My main tactic was to manipulate the federal reserve number according to how inflation fluctuated. one of my mess-around games was just manipulating the federal funds rate and it seemed to work pretty effectively. I was appointed chairman in 2/4 games.
After playing the game I first budged the rate up .5 in each direction to get a feel for what it would do to the economy. In doing so I found that at 3.75 the economy did really well. As much as I was tempted to change the amount everytime the line drifted, I didn't. The newspaper reports often said "Fed taking 'wait and see' approach", which was actually a good move. After the first round the newspaper report said "Fed guru reappointed-solid policies sustain economic recovery" I ended with unemployment at 4.45% and inflation at 2.10%.
When I first started playing the game, it was really confusing and I messed everything up. I then started guessing and checking, which made the game a little easier. One thing that I learned was that there will be less inflation if there is a great amount of money being spent. In order to decrease inflation rate, I would increase the marginal fed res number. Although it took a lot of guessing, I got the hang of it. This game made me realize that the slightest changes in monetary policy can make everything go wrong or right.
while playing the Fed Chairman game, I adjusted the federal funds rate solely based on inflation and let unemployment rates fall where they may. When I saw that the inflation was getting high I dropped the federal funds rate, and depending on how drastic the inflation was determined how drastic i adjusted the rate. I was reappointed as chairman every time.
My strategy work well. About the 5th time I had it mastered to me, I think it was just figuring out how long it took for the desired change to take effect plus how many units in the time limit. Once you do that you pretty much get it stabilized.
While playing the game, I just made sure to treat it like any other tedious online game, pay very close attention. At the sigh of anything changing a little too fast, I reacted by changing its corresponding balance. In that strategy I remained as chairmen on my first try, and continued to even on my 4th.
MY strategy was to increase the Federal Funds rate to 14% to increase the value of the dollar. after 3 quarters I dropped the rate to 0% to bring the dollar back to the original value. In the end my unemployment rate was 1.94% and my interest rate was 4.45%. I think this worked well for me as both of the lines were inside of the dotted lines on the graph.
While playing this game I realized how much of a balancing act the Fed is. Everytime I used the different methods to decrease employment, inflation would go up. It was truely a case of pick your poison. It took me 4 tries to be appointed.
During this game, I learned that changes made by Feds have drastic effects. Increasing or Decreasing Interest rate should be gradual or there bigger change in the economy. Though a increasing the interest rat 1% does not seem like a big change it promotes drastic changes in the economy.
While playing the game I learned that the economy changes make drastically in a short period of time. Therefore, when crisis struck, I chose to only make small changes in the federal reserve number. It also was very helpful to see the graph of what was happening and to see either the constant line or the changes that were being made in order to help with my decision to lower or raise the rate.
Basically my strategy for this economic game was a process of consistency. I didn,t want unemployment rates nor inflation rates jumping up and down because then I would have to make huge changes to the interest rate which would be inaccurate and slow to effect the economy. So all I did was set the inflation rate to double or more than the inflation rate and it seemed to work out pretty well.
This federal chairman game has humbled me as a monetarist. On paper, monitoring the inflation/deflation rate appears to be simple. The game showed me other wise. I would feel most secure when I could keep the interest rate constant and still have everything trending how I desired. Although as time passed my wave lengths were becoming more and more radical and eventually skewed to far resulting in my dethroning.
In this stock market game, my strategy was to go from one end of the spectrum to the other to see the effects on the economy. From there, I tried to decide what move to do next based on the headlines and inflation/unemployment rates. Needless to say, I played three times and each time failed to be re-elected. I saw just how gradual of a process it is to take the economy to a certain point. The toughest part was when some random thing happened, like an increase in imports. It was hard to determine how much to change the rate by.
I found that raising interest rates in times of deflation worked best, and the opposite was true for inflation. However, the best strategy was to anticipate your changes not occurring immediately, but instead waiting a few quarters to fully see the changes. Overall, sticking with a single interest rate when the unemployment and inflation was headed toward their normal levels seemed to work the best. 2nd try reappointed.
-Alex Collins
The first few times I played it, I couldn't get the inflation and unemployment rates to work together. Then, I decided to try to follow what the newspapers were saying to raise or lower the reserve, but that didn't work out so well either. Then, finally, at the beginning I decided to raise only by a little until the rates stabilized and only raised or lowered the reserve if they needed a little push. By doing so, I was reappointed as Chairman.
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