Last year, the US Federal Reserve cut its interest rate three times. And this March, it lowered its rates twice to its current 0% to 0.25% in response to the ongoing coronavirus pandemic. But what does all this mean and how does it affect the economy?
Chair the Fed, a free browser game, aims to educate the public on how monetary policy affects inflation and unemployment by assigning players to take charge of a simulated economy. In this game, players take on the role of Chair of the Federal Reserve. Their job is to set monetary policy with the aim of achieving full employment and low price inflation.
As the Chair, each player is given four years, broken down into 16 quarters, to reach this goal. The goal will be indicated on a line graph in the game and what the player needs to do is adjust interest rates based on the trajectories of unemployment and inflation in the multi-line graph.
At various intervals, “breaking news” and “news brief” alerts will pop up at the top of the screen with information about the economy to indicate how the player’s assigned interest rate has (or has not) helped and what he or she should do next. Be sure to pay attention to the headlines or you might end up crashing the US economy in the process!
This game was designed by the Federal Reserve Bank of San Francisco (FRBSF) as an educational tool for schools and the public. The simple-to-navigate site provides useful links for the public to learn more about the FRBSF and the US Fed, including its history, roles and responsibilities.
There are other resources available on the website as well, such as insights on the banking sector and on cash and how we use it, and links to the Federal Reserves of other US states.
The site features the FRBSF Economic Letter, which contains a wide range of economic analysis and research summaries provided by experts. It also has Presidents’ Speeches, which feature speeches delivered by current and past presidents, covering the economic outlook, monetary policy and other topics.
There is also a FedViews link, which offers experts’ views on current economic developments.
Those who want a quick introduction to the Fed and monetary policy using a demo of the game can find it in a PDF attachment of an activity under the “For Educators” section of the site. The game can be accessed for free via https://www.sffed-education.org/chairthefed/