Professor of Economics, Waubonsee Community College, Sugar Grove, IL
Can your students stabilize the economy using the federal funds rate? part of Starting Point: Teaching and Learning Economics:Starting Point: Economics in Two-Year Colleges:Activities
This activity uses an interactive online simulation of the effects of federal funds rate changes on the rates of unemployment and inflation (provided by the Federal Reserve Bank of San Francisco). Students will take on the role of monetary policy decision making as if each were the Fed Chairman. They will be given various headline news events reflecting shocks to the economy to which they will respond with monetary policy actions by making decisions about the direction and magnitude of change in the federal funds rate. The impact of their actions will be reflected in changes in the unemployment rate and the inflation rate. Can your students stabilize the economy and get reappointed as the Fed Chairman after 16 quarters?