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: mhansen@american.edu.
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.
Click
to access a description of “Masters of the Economy, instructions and materials for playing the game,
and a spreadsheet that makes record-keeping in
the game a little faster.