A Game for Review and Understanding of Monetary and Fiscal Policy Tools
Citation: Hansen Mary Eschelbach (2006), “Masters of the Economy.” ONLINE. Available: http://academic2.american.edu/~mhansen/MastersGame. Contact: firstname.lastname@example.org.
Abstract: Pairs or teams of students direct fiscal and monetary policy with the goal of achieving a constant three percent growth in GDP in the economy. The basic version provides a review of the basics of monetary and fiscal policy tools. The game prompts students to categorize policy tools as either monetary or fiscal policy. Students then choose a specific policy action, such as a decrease in taxes, and indicate how it is expected to change GDP. Finally, students calculate the magnitude of the desired effect.
Class size: Unlimited; played in groups of 2 to 6.
Time: One (50 minute) class period for basic game. Can be assigned as group homework.
Variations: The game has three versions; versions progress in complexity. The first variation on the basic game allows the actual effect of policy actions to differ from the intended effects through the introduction of uncertainty. The second variation introduces the problem of coordination between fiscal and monetary authorities.