It’s your job to keep inflation low and stable (around 2%) and keep the unemployment rate near its normal rate (around 5%).

Your tool is the federal funds rate. Here’s how it works:

• You can lower inflation by setting the federal funds rate well above the inflation rate, but you will also push up unemployment for a while.
• You can lower unemployment for a while and push up inflation by setting the federal funds rate close to, or even below, the inflation rate.

You decide on the funds rate every three months for the next four years. Adjust it by clicking the plus (+) or minus (-) buttons, then clicking GO to see what happens to inflation and unemployment.

Watch the headlines for clues as to how you are doing. Headlines also reveal events beyond your control that may throw your plans off course unless you react.

Watch Out! There is some time lag between your rate changes and their effect on unemployment and inflation.