Discussion
Student reponse
This was actually really interesting and fun to do!
I started out by keeping the Fed Funds the same for the first quarter. I noticed that the natural unemployment rate would rise and the target inflation rate would lower slightly when I kept the Fed Funds at 4.00 for two quarters. As new occurrences would pop up depending on how well the predictable economy was going to be I lowered or raised the Fed Funds very slightly to keep the lines reasonably close to their target goals. I noticed when the economy was predicted to crash due or inflationary scenariosarose it became harder to balance the goal lines. There was a point where deflation began to spiral out of control and it was hard to get it to come back. I played the game twice. The first time I lost my job… oops! The second time I played a little more around with making slightly more drastic measures in the Fed Funds. I was able to be rehired after that time! Hooray!
This would definitely would not be the job for me… As I do appreciate the understanding of how the Fed Funds plays into so much of our economy I wouldn’t want to be the one in charge of it… nor do I think anyone else would want me handling our country’s Fed Funds.. 😉