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Fulton Virtual Economics: Monetary Policy Project
In this project, you will show your understanding of monetary policy and the Federal Reserve’s
tools of monetary policy.
Who are you for this project?
For this project, you are the Chair of the Board of Governors of the Federal Reserve (usually
just called the “Fed Chair”).
What is the situation?
As the Fed Chair, you must report to Congress twice each year to inform them about the
status of the economy and the current monetary policy plans of the Federal Reserve. You
have just reported to Congress that the Fed intends to start following a contractionary
monetary policy.
The president is furious! The economy has been growing quickly, and the president intended
to use this fact to gain support for reelection in November. If the Fed starts following a
contractionary monetary policy, the economy will slow down, which the president’s
opponents could use against the president in the election. You have just received an angry
letter from the White House, demanding that you explain the actions of the Fed.
What is your task for this project?
You must write a calm, rational response to the president’s angry letter. In this letter, you
