DISCUSSION POST MUST BE 8+ SENTENCES AND REPLYS MUST BE 5+ SENTENCES! STAY ON TOPIC BE POSITIVE AND DO NOT COMMENT ON GRAMMAR ERRORS (TALK DIRECTLY TO PERSON WHEN DOING REPLYS)
1) DISCUSSION POST
Go to http://sffed-education.org/chairman. Use the Learn More button and review the tight (contractionary) and easy (expansionary) tools of the Fed as well as the use of each. Briefly examine the Economic Dictionary and the Policy in Depth features.
Now play the game! You are the Fed Chairperson! You begin with 16 quarters, 4 years, and then your job is up for review. You begin with rates at 4.5, inflation at 2.14% and unemployment at 4.75%.
Make decisions on interest rates for the 16 quarters. Summarize the changes you chose and explain your results. Do you still have a job? Why or why not?
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After many attempts, at the end of the game, I have positive results, I still have a job and I was finally confirmed for another term as chair of the federal reserve. First I reduced the interest rate from 4% to 3% so the low rate add momentum the economy and I keep that rate for one more term but market suggested inflation ahead, then Increase the rate to 3.25 % and the inflation increase to 2.99 % as well the unemployment to 5.45%, then I reduce the interest rate to 2.50% then unemployment decrease to 4.28 and inflation to 2.88%. I increased the interest rate to 3% and the new rate added momentum to the economic. I keep the rate for few terms and my economic results in the final year of my term was a house market crash during my term, but the unemployment rate was at 4.21% and the inflation rate was at 2.19%. I believe that we need to keep the interest rate between 2.5 and 3 %B in order to keep the balance between the unemployment and the inflation.
3) CLASSMATE REPLY
This game was a difficult and each time I lost my job. I started to get the hang of it, but did not have enough quarters left to bring unemployment and inflation rates back to the desired percentages. I understand a little more after reading and playing this game, how difficult it is to control both unemployment and inflation. Though unemployment and inflation should be complementary in normal times, when they both start working against each other it is difficult to get them back under control. I made some mistakes in the beginning of my term which made it hard to bounce back from later on. When my inflation rose too high (over 10%) I added more to the fed fund (near 20) to get it back under control, but then my unemployment rose higher. When I lowered my fed funds to near 0%, the unemployment dropped but I didn’t have enough time to recover before my term was over.B
This game mirrors real life in that decisions made by monetary policies have a great effect on our economy. Though we are recovering the effects of the Great Recession of 2007 can still be felt today. During that the when unemployment was at its highest, the fed rate was reduced to zero to help balance out the economy. It’s been a decade and we are now getting closer to the natural unemployment rate and inflation rate.