3. Currently, the Fed follows an interest rate target. The target
interest rate (Fed Funds Rate) is adjusted according to a ‘Taylor
Rule”
FF = 2% + (Inflation) - 1.25(Unemployment – 5%) + .5(Inflation – 2%)
Long Run: When the economy is at full employment (
Unemployment = 5%) and inflation is at its long run target (2%),
the Fed targets the Fed Funds Rate (Nominal) at
Short Run: During recessions (when inflation is low and
unemployment is high), the Fed lowers its target. During
expansions, when inflation is high and unemployment is low), the
Fed raises its target.
5. • Each group is been nominated as the new
governor of Federal Bank of the United States.
Has a task for you:
He has asked to adjust your monetary
policy such that following results will be
achieved
6. Rules for the new Governor
• Please go to this site -http://sffed-
education.org/chairman/.
• Complete task in 15 minutes.
• You have 18 terms to complete.
• If screen remains idle for some time game
restarts and you loose your time.
• You can not open other browser window until
games.
7. • Credit System:
• Completion before 15 min
• Achieving accurate target:
• Achieving relatively close target
• Call Obama office member
• Seek opponents strategy
8. Final step:
• Top 2 scoring teams will be invited to stage.
• Each team during each term has to note down
the inflation and unemployment role, the hints,
and why you decided to fix that particular
interest rate.
• The selected will randomly asked to explain any
term and its implication.
• Finally depending on answers madam will select
the “Board Of Governors” which will be
felicitated.
