small simulation assignment

It’s a “Chair the Fed” simulation with a data sheet and some questions. If you understand the content, should take an hour or less?

Here it is:

Optional (small) Assignment 6

BEFORE PLAYING Chair the Fed, watch “Video Q&A 10.

What is the appropriate level for the federal funds rate?”

answer the following questions:

  • (1 point) What is the Fed’s dual mandate?
  • (1 point) Generally speaking, what effect do higher interest rates have on the economy?
  • (1 point) Generally speaking, what effect do lower interest rates have on the economy?
  • (1 point) How do you calculate the real fed funds rate?
  • (1 point) Is an 8% fed funds rate designed to slow the economy?
  • (1 point) Why might you want to slow the economy?

You’ll want to complete the attached datasheet as you play the simulation.

With the datasheet in hand, you’re now ready to play Chair the Fed at…

7. (3 points) At some point as you play, take a screenshot of your computer screen to demonstrate that you have completed the simulation. (include this in your submission)

8. Complete the Datasheet, including the questions on the second page of the datasheet.

After playing Chair the Fed, answer the following questions:

9. What level of the real fed funds rate seemed to be ‘neutral’ i.e., not too tight and not too loose?

10. Looking at your completed datasheet, can you find one or more quarters where you set the fed funds rate in this neutral zone?

11. What economic conditions seem to support a more neutral range?

12. Returning to the real world, outside of the game, what is the current stance of monetary policy? In answering this question, you may wish to refer to recent statements from the Federal Open Market Committee (FOMC) which can be found at… (Your answer should be between 150 and 250 words.)