Chair the Fed:
A monetary policy game
A monetary policy game
Adjust the fed funds rate below, then press GO.
Quarters remaining in your term
Fed funds rate
This is the Fed’s key policy interest rate. By adjusting the fed funds rate in response to changing economic conditions, you can help keep unemployment and inflation on track:
- Raising the fed funds rate (tightening policy) tends to reduce inflation and increase unemployment.
- Cutting the fed funds rate (loosening policy) tends to boost inflation and lower unemployment.
Unemployment rate
The unemployment rate measures the number of people who do not have a job but are looking for work.
- A key goal of the Fed is to promote maximum or full employment.
- This goal is consistent with an unemployment rate equal to its natural or normal level.
- In practice, the natural unemployment rate is hard to measure and may vary over time, but in this game, it is set equal to 5%.
Inflation rate
The inflation rate measures how fast the overall level of prices in the economy is going up or down.
- A key goal of the Fed is to promote a stable overall level of prices.
- This goal is consistent with an inflation rate equal to the Fed’s target inflation rate.
- Because longer-run inflation is primarily determined by monetary policy, the Fed has been able to set an inflation target rate of 2%.
Fed funds rate
Unemployment
Inflation
Natural unemployment rate
Target inflation rate
New Chair Appointed
Faces moderate inflation but falling unemployment
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