High School Fed Challenge

What is the High School Fed Challenge?
The High School Fed Challenge is a competition designed to bring real-world economics into the classroom. Teams play the role of monetary policymakers by analyzing current economic conditions and recommending a course for monetary policy. The New York Fed invites high school teams in the Federal Reserve's Second District to enter this competition.

2014 Competition Results
Finals Winners
1st Place
West Windsor Plainsboro High School North
Plainsboro Township, New Jersey
2nd Place
Montclair High School
Montclair, New Jersey
Honorable mention
Bergen County Academies
Hackensack, New Jersey
Honorable mention
Mount Saint Mary Academy
Watchung, New Jersey
Honorable mention
Northern Highlands Regional High School
Allendale, New Jersey
Honorable mentions listed in alphabetical order.
Schools in the Semifinal Round
Bergen County Academies
Bethlehem Central School District
George W. Hewlett High School
High School for Math, Science and Engineering
High Technology High School
Indian Hills High School
Mamaroneck High School
Marlboro High School
Montclair High School
Mount Saint Mary Academy
Northern Highlands Regional High School
Westfield High School
West Windsor Plainsboro High School North
William A. Shine Great Neck South High School
About the Competition and Its Goals

The High School Fed Challenge is an unforgettable experience in economic analysis, monetary policy decision making, public speaking and teamwork. For participants, it's a 25-minute presentation by a team of three to five high school students representing their school in the Federal Reserve's Second District.

The team's performance consists of two parts: a 12-minute presentation on the economy—modeled after those made by Federal Reserve decision makers—and a 13-minute Q&A session. In the final round, teams read their statements and have a 20-minute Q&A session. The format of the presentation is flexible; however, each team's presentation must:

  • address current economic conditions;
  • forecast near-term changes in economic and financial conditions of critical importance to monetary policy (such as unemployment, inflation, and output);
  • identify possible economic, financial, and international issues that might present either positive or negative risks to the economy;
  • recommend a monetary policy response; and
  • write a statement, modeled on the FOMC statement that states the policy decision and communicates the Committee's thinking and reasons.

A Q&A session follows each presentation. Although judges may ask about any relevant topic, they generally ask the following types of questions:

  • Questions about the required charts, for example: "Define the unemployment rate and what does it tell us about current resource utilization and output gap in the economy?"
  • Follow-up questions related to data, analysis, or recommendations made during the team presentation, such as "Explain your argument that the Fed should not be concerned about possible deflation."
  • Macroeconomic and monetary policy questions, for example, "Is there always a trade-off between inflation and unemployment?"
  • Hypothetical questions, like "Suppose GDP declined for the next two quarters; how would that change your monetary policy recommendation?"
  • Fed-related questions, such as "Should the Fed have a specific inflation target and, if so, should it make that target explicit?"
  • This year, we will have the competitive division where teams are scored by a panel of judges and winners advance to the next round of presentations.
  • increase understanding of macroeconomics and the Federal Reserve's role in setting U.S. monetary policy and ensuring financial stability,
  • promote interest in economics as a subject for study and the basis for a career, and
  • foster a greater understanding among students, teachers and the New York Fed.
Fed Challenge participants develop skills—the ability to think analytically, to make effective presentations, to work as a team—that are valuable for life.

In order to foster an efficient and respectful environment to successfully participate in the High School Fed Challenge, students, faculty advisors and judges are reminded to follow the Code of Conduct

How to Participate

A team consists of three to five students, who all attend the same high school. A team can be put together in a number of ways:

  • As part of an extracurricular activity. The team is made up of student volunteers who work on the Fed Challenge as an out-of-class activity. An advantage of extracurricular recruiting is the advantage of having returning participants, who can relate, first-hand, their experiences from the previous year's Challenge.
  • As the result of a class- or school-based competition. The class is divided into teams. Each team makes a presentation before the rest of the class; the team with the best presentation goes on to represent the school. An alternative is the "all-star" approach, in which the five best presenters in class are chosen. Or team selection can be extended to all the classes in a school by choosing either a best-of-school team or a team of the school's best presenters.
  • By teacher selection. A teacher assembles a team on the basis of overall performance, some in-class assignment, or expressed interest in the subject.
Other class members can get involved by taking part in team activities such as:
  • gathering and analyzing data and useful background information,
  • researching important concepts and issues that are likely to be important to monetary policy,
  • preparing charts and other parts of the presentation,
  • judging practice sessions and providing feedback, and
  • serving as an alternate team member in case of team member absence on the day of the competition.


The purpose of the faculty orientation session is to (1) help teachers decide if they are interested in participating and (2) prepare them for their role as advisor.

Please note that this year the faculty orientation will cover only the fundamentals of the program and it's only required for those teachers who have never participated in the HSFC.

The purpose of the student orientation sessions is to help students prepare for the event. Each year's agenda may be slightly different, but the orientation generally covers the competition process, presentations by Fed staff on the U.S. economy and Fed policy, and a chance to ask former participants about their experiences.

Students are strongly encouraged, but not required to attend the orientations.

Each faculty advisor should plan on bringing up to five team members. We will contact advisors one week before the orientation and allow additional team members on a space available basis.


Faculty advisors enter their teams online at the High School Fed Challenge home page.

  • Schools must be in the Second Federal Reserve district which includes New York State; Bergen, Essex, Hudson, Hunterdon, Middlesex, Monmouth, Morris, Passaic, Somerset, Sussex, Union and Warren counties in New Jersey; and Fairfield County in Connecticut.
  • Each school can enter one team. If schools want to organize practice or other competitions for their second or third teams, we are happy to assist by sending advisor e-mail addresses to interested faculty advisors.
  • All correspondence, including sign-up and materials distribution, will be done electronically through the New York Fed's website or e-mail. It is the responsibility of faculty advisors and student participants to check the website for notices and posted materials and to read all e-mail messages carefully. There will be no exceptions to this policy. Teams are encouraged to sign up for an e-mail alert that will inform them of changes to the website.
Faculty advisors will be asked to:
  • Indicate if they want to bring their students to a student orientation session and sign up for the session they wish to attend.
  • Have their school principal send an endorsement via e-mail to the program director, Adrian Franco at adrian.franco@ny.frb.org. This endorsement is required for team participation.

Principal acknowledgement 2014

Note: Other adults, such as parents or interested community members, can serve as faculty advisors, but they must receive permission and endorsement from the school principal. The principal should e-mail the program coordinator, as described above.


  • All first-round presentations will be conducted at the New York Fed. All teams must be available to present in the morning and/or afternoon. All teams must be on time for their scheduled presentations.
  • The semi-finals and finals will be held at the New York Fed in one day—the semi-finals in the morning, the finals in the afternoon. The winner will be announced at the end of the day's competition.
  • First and semi-final round presentations will use paper presentations and handouts. No computers or projectors will be available. Students and faculty advisors must bring three paper copies of their handouts and monetary policy statements with them to the preliminary competition for the judges. Teams advancing to the semi-final round must bring five copies of their handouts and monetary policy statements.
  • Finalists will only answer questions from the judges (no presentation is required).
Presentation procedures:
  • The judges will introduce themselves and then ask students to introduce themselves, without mentioning their school or district.
  • The timekeeper will inform the team that it will have a maximum of 12 minutes to make its presentation and that the team will be signaled when two minutes remain.
  • Students may refer to, but not read from, notes or scripts.
  • Teams may huddle briefly to formulate a response to a judge's question. However lengthy and/or frequent huddling may result in points being deducted.
  • No questions will be addressed to the team during its presentation.
  • Teams can "lift" charts displaying these series from the New York Fed website. The charts can be copied into presentation documents, resized, and headings and other bullets can be added.
  • Teams may obtain the required data series from other Federal Reserve Economic Data (FRED) or from other sources and display them differently using their own chart formats, but the required data series must be included.
  • The New York Fed website will provide additional macro data series charts. Teams are encouraged to study them and consider using them in their presentations.
  • Teams may supplement charts provided by the New York Fed with additional data/charts of their own choosing.
  • Presentation format is flexible (mock FOMC, talk show, business presentation, etc).
  • Teams are not allowed to use posters, flip charts or other visual aids during their presentation.
  • Teams should be prepared to explain their choice of additional charts and data series—that is, explain why they chose to focus on data other than the required series.
  • Cell phones and computers must be put away in student holding rooms. We will also ask the audience to put away their cell phones and computers.
  • Teams are required to include 6 standard macro data series in their presentation: total nonfarm payroll employment, civilian unemployment, core CPI or PCE, headline CPI or PCE, effective federal funds rate and real GDP.
  • Teams are required to hand judges a written "statement" closely modeled on the FOMC statement. The statement can be included in the oral presentation and chart deck in another format that is consistent with that format. For example, for teams using a talk show format, the statement handed to the judges should be modeled on actual FOMC statements; however, the statement in the chart pack can be in a format consistent with a talk show.
For the final round:
  • The final round will be devoted to Q&A (no prepared presentation or statement). Judges will determine the winner based solely on the Q&A.
  • The winning team will be invited back to the New York Fed to celebrate their victory and to receive their school's engraved trophy.


How are competition dates selected?

  • Dates are chosen based on the New York, New Jersey and Connecticut academic calendars. Once tentative dates are selected, they are circulated to last year’s High School advisors for comment. Based on this feedback, the New York Fed staff sets the dates, notifies last year’s advisors by e-mail and posts the schedule on the Fed’s public website.
How many competition dates are there?
  • There are two preliminary competition days and one semi-final/final day. The semi-final and final competitions are held on one day, with the semi-final round taking place in the morning and the finals in the afternoon.
What are brackets?
  • A bracket is a group of teams that compete against each other in a competition round. All the teams in a bracket face the same judges and compete in the same room. The winner of each bracket moves on to the next round of competition. The preliminary round of the Fed Challenge can include as many as 15 brackets, each with six teams. The semi-final round has 5 brackets, each with 3 teams. Five teams compete in the final round.
How are teams assigned to brackets and preliminary competition dates?
  • Teams are assigned at random to brackets and to one of the two preliminary competition dates. Under extenuating circumstances, the New York Fed may assign a team to compete on a specific preliminary date. This accommodation, however, is not guaranteed.
Who are the competition judges and how are they assigned to brackets?
  • Judges consist of New York Fed economists and staff who are experts on economics and monetary policy. Judging teams are assigned at random to the brackets.
What happens if a judge knows one of the team participants or can identify the team?
  • Although we make every effort to keep team identities secret (and teams that identify their school have points deducted from their score), sometimes a judge realizes in the midst of competition that he or she knows the team or students.
    The High School Fed Challenge handles this through an honor system. Judges are on their honor to judge fairly and impartially. If a judge believes he/she cannot be impartial, this is reported to the head judge as soon as possible. The head judge makes the final decision; the judge with the conflict can either continue if he/she can be impartial; otherwise leave the room. The head judge may choose to consult Fed Challenge staff but his/her decision is final. The head judge will announce that the departing judge will not be participating further.


Faculty advisers are encouraged to write individual letters of recommendation for students based on their participation in the High School Fed Challenge.

Here are some tips from Derek Bok, Center for Teaching and Learning, Harvard University:

  • Tell the student how strong a letter you feel you can honestly write for them; give them a chance to ask someone else if you cannot write a strong letter.
  • Use a letterhead that matches your relationship with student.
  • Explain how long, how well and under what circumstances you have come to know the student. Why are you qualified to comment on him or her?
  • Give the recipients of the letter information about the aspects of student performance THEY care about; try to put yourself in their shoes. Include those special features that will interest them.
  • Address aspects of the student's performance you know first-hand. Eyewitness accounts are more convincing than hearsay.
  • Support your generalizations with SPECIFIC details or anecdotes; help the reader to imagine the student as you describe them. A purely general description is not useful.
  • End the letter with a summary paragraph recapping your main points; if possible, compare the student with others you have known.
  • Ask the student to let you know what happens to their application (you made the effort, you deserve some feedback).
If you would like to include some specific information about the Fed Challenge, you can attach the description located in the “How To Guide”, or borrow some of the language to use in your letter.

We wish you and your students the best of luck!

Fed Challenge Description for Recommendation

The High School Fed Challenge Championship is an instructional activity designed to bring real world economics into the classroom. The event takes place at the head office of the Federal Reserve Bank of New York and is inspired by the work of the Federal Open Market Committee.

High school teams, made up of three to five students, play the role of monetary policymakers by gathering and analyzing data and research in preparation for a 12-minute presentation that includes:

  • an analysis of current economic and financial conditions in the United States;
  • a near-term forecast of economic and financial conditions of critical importance in the development of monetary policy (for example, U.S. unemployment, inflation, output);
  • identification of risks to the U.S. economy that should be of special concern for monetary policymakers; and
  • a statement, modeled on the FOMC, with monetary policy recommendations with supporting reasons.

Following each presentation, is a 13 minute Q&A by a panel of judges, comprised of Federal Reserve staff members. Teams may be asked to explain anything in their presentation, to discuss current controversies and issues, and to think through the answers to hypothetical situations.

Teams are assessed on their knowledge of macroeconomics, the Fed and monetary policy; on the quality of their research and analysis; on the logic and clarity of their presentation; and on their ability to respond effectively to questions.

Fed Challenge provides an opportunity for participants to develop skills—the ability to think analytically, to make effective presentations, to work as a team—that are valuable for learning and performance in higher education and in the workplace.

How to Prepare

During the orientation sessions, students and faculty advisors hear presentations from economists of the Federal Reserve Bank of New York on monetary policy, the current economic outlook and how to create a forecast.



Teams must make two decisions when preparing their presentations: (1) data and (2) format. Teams must also include a written "statement," roughly modeled on the FOMC statement that communicates and explains their decision, and gives appropriate guidance about what the Fed may be watching or considering going forward.

There is a wealth of economic data available from a wide variety of sources, and it is easy to get lost in a morass of detail. To keep you on track, the Fed Challenge provides some help and sets some requirements.
Any solid analysis of the current state of the economy will include understanding the trends in certain key indicators. Thus, all teams are required to present data on six data series: civilian unemployment rate, headline inflation (CPI or PCE), core inflation (CPI or PCE), the federal funds rate, total nonfarm payrolls and real gross domestic product.
These indicators are available on the New York Fed website in the How to Guide, under the tab, "Charts for Presentations." (Teams may also obtain the indicators from FRED at the St. Louis Fed, or other sources.) Also included are other charts that teams are encouraged to include in their presentations.

Choose the indicators that you think are most relevant to the current economic situation and organize them to tell your story. To use the charts on the New York Fed website, you may simply copy the image and drop it into a Word or PowerPoint file. The chart image may be made larger by tugging on the corner; headlines and other explanatory text may be added to emphasize the points you want to make.
Teams may supplement the indicators provided by the New York Fed with additional data from other sources. It is the teams’ job to figure out which are the most important indicators and how to use them. Different indicators are important to understanding the economy and determining monetary policy at different points in time. Teams should be prepared to defend their choice of unusual data.

Although there is no prescribed format for a Fed Challenge presentation, teams generally present in one of three ways:

Research-style presentation
Team members put together their presentation in a logical way, beginning with an economic overview and ending with a monetary policy recommendation. Then they break the presentation apart, assigning a logical component to each participant and using visuals for the indicators most critical to their recommendation. For example, the first team member could open with a statement summarizing overall conditions, such as "Many economists have described our economy as being in a soft patch," and then follow with the team's forecast for the general economy and a discussion of current debates and FOMC policy options. A second team member might turn to an in-depth examination of current economic conditions and their implications for the near term. A third and fourth member could extend the examination, highlighting another two or three indicators in the process. Charts and other visual devices should be used for data relevant to the team's ultimate recommendation. The summary and the recommendation would then be presented by the team's fifth member. This presenter should probably address two or three policy options before focusing in on the course of action that's most consistent with the team's collective insights, and a suggested wording for the statement.

FOMC role play
With this approach, the five team members play the role of Reserve Bank presidents discussing economic and financial conditions, which often results in participants' putting forth different monetary policy prescriptions. For example, referring to a chart of an economic indicator, one "Bank president" might say, "Given the GDP increases in each one of the last four quarters, I think we should raise interest rates by 25 basis points. A second president might counter: "No, interest rates should stay where they are. Despite the GDP data, this chart reveals that Nonfarm Payroll Employment has recently peaked and that fears that the economy will overheat are no longer relevant." The role play continues, with each recommendation supported by data of particular importance for that issue. Discussions end with a vote, as do real FOMC meetings, and an articulation of whatever consensus is reached in the form of an FOMC statement.

Television news panel
This format has one team member acting as moderator and the other four serving as expert panelists. The moderator refers to the upcoming meeting of the FOMC and may set up the discussion by summarizing economic conditions. The moderator solicits the views of the panel who take turns, each focusing on a different set of variables and interpreting the implications for the forecast and policy, while showing charts or other visual devices that illustrate their points. Panelists can conclude their segments with a recommendation for short-term interest rates and make their own "statements" or have the moderator sum up the group's view in the form of a single statement.


All teams are required to present data on six indicators and encouraged to include additional important economic indicators in their presentation. For your convenience, we have posted the updated charts with these indicators. You can copy these charts and use them in your own presentation, if you wish. Some of the charts have associated questions.

Charts for Presentation


The purpose of the monetary policy statement is to bring together the team’s analysis, policy recommendation and supporting reasons.

Required: Teams must hand judges a written “statement” closely modeled on the FOMC statement.

Optional: The statement may also be incorporated into the oral discussion in a style consistent with the teams’ presentations. For example, a team using a talk show format should provide judges with a statement modeled on actual FOMC statements; however, the statement presented in the discussion can be in a format consistent with a talk show.

All statements should include the following elements:

  • clear announcement of the policy decision,
  • summary of current gross domestic product (GDP) and employment conditions and outlook
  • summary of current inflation conditions and outlook, and
  • explanation for the policy decision.

The following elements are optional:
  • discussion of the balance of risks to the economy going forward—that is, the major risks to the economy on the employment or inflation end—along with the most likely course of future policy moves, and
  • discussion of any other policy moves such as the discount rate.

For example, see how these elements appear in an actual FOMC statement issued on June 22, 2011:

Information received since the Federal Open Market Committee met in April indicates that the economic recovery is continuing at a moderate pace, though somewhat more slowly than the Committee had expected. Also, recent labor market indicators have been weaker than anticipated. The slower pace of the recovery reflects in part factors that are likely to be temporary, including the damping effect of higher food and energy prices on consumer purchasing power and spending as well as supply chain disruptions associated with the tragic events in Japan. Household spending and business investment in equipment and software continue to expand. However, investment in nonresidential structures is still weak, and the housing sector continues to be depressed. Inflation has picked up in recent months, mainly reflecting higher prices for some commodities and imported goods, as well as the recent supply chain disruptions. However, longer-term inflation expectations have remained stable.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The unemployment rate remains elevated; however, the Committee expects the pace of recovery to pick up over coming quarters and the unemployment rate to resume its gradual decline toward levels that the Committee judges to be consistent with its dual mandate. Inflation has moved up recently, but the Committee anticipates that inflation will subside to levels at or below those consistent with the Committee's dual mandate as the effects of past energy and other commodity price increases dissipate. However, the Committee will continue to pay close attention to the evolution of inflation and inflation expectations.

To promote the ongoing economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate, the Committee decided today to keep the target range for the federal funds rate at 0 to 1/4 percent. The Committee continues to anticipate that economic conditions—including low rates of resource utilization and a subdued outlook for inflation over the medium run—are likely to warrant exceptionally low levels for the federal funds rate for an extended period. The Committee will complete its purchases of $600 billion of longer-term Treasury securities by the end of this month and will maintain its existing policy of reinvesting principal payments from its securities holdings. The Committee will regularly review the size and composition of its securities holdings and is prepared to adjust those holdings as appropriate.

The Committee will monitor the economic outlook and financial developments and will act as needed to best foster maximum employment and price stability.

FOMC meeting calendars, statements and minutes


Basic Presentation Rules

  • Students may refer to, but not read from, notes or scripts.
  • Each team member must play a substantial role in making the presentation and answering judges' questions.
  • More than one team member may answer a judge's question.
  • Team members may "huddle" to formulate a response to a judge's question; however, lengthy and excessive conferences may result in points being deducted if it significantly limits the number of questions posed.

The Fed Challenge will help you develop the presentation skills needed to perform well before any audience: speaking naturally, making eye contact, listening to and answering questions effectively.

Familiarity with the material is extremely important. The best presenters speak naturally because they really understand the information.

Although a script may make students feel more comfortable, judges are paying more attention than in the past to whether students understand the basic concepts and information. Thus reciting or memorizing a script is not likely to help convince the judges or result in a high score. Hand-held cards to remind you of basic concepts or facts can be useful—although they probably should contain only a few words; cards that contain complete text tend to result in recitations, which don't convey deep understanding of the material and thus may cause the team to be penalized by the judges.

  • HSFC 2014 Scoring Rubric

    • An effective speaker makes eye contact with individual members of the audience. Doing so allows the speaker to develop a relationship with audience members. It also allows the speaker to check for signs of comprehension or confusion.
    • An effective speaker is loud and clear. The speaker should address his or her remarks to the person farthest away in the room. He or she should also slow their natural speaking rhythm and enunciate each syllable.
    • An effective speaker pauses for a second in the articulation of a point for emphasis and to give listeners a chance to catch up.
    • An effective speaker gestures naturally and knows that exaggerated hand motions may distract listeners.

    While most teams will create their presentations on a computer, preliminary and semi-final round competition participants use paper copies only; a computer will not be available. Thus, participants should rehearse their presentations with paper presentations. One tip is to make sure to "talk" the judges through the charts, for example, by saying "Please turn to the chart on page 5," or "If you flip to the next page, you will see..."

    When using paper handouts, the speaker should:
    • Describe for the audience as explicitly as possible what it is seeing. For example, "What you see here is a chart showing real GDP over the last two years, with time measured in years on the horizontal axis and real (inflation adjusted) GDP in percentage terms on the vertical axis."
    • Then, interpret the visual for the audience. For example, "As this chart of rising real GDP clearly shows, the economy may be in real danger of overheating."
    • With charts having fewer than four bullets, the speaker may wish to read each point aloud first before elaborating. On the second reading, the speaker should try to keep his/her remarks to a few sentences.
    • With charts having four or more bullet points, omit the initial word-for-word reading; instead explain each bullet point immediately after reading it out loud the first time, taking the audience down the chart one bullet point at a time.

    Answering Questions

    The most difficult part of the Fed Challenge is answering questions from the panel of judges. The challenge begins with the questions themselves and the team's ability to grasp them. If the team is uncertain about a question, it should immediately ask that the question be repeated or clarified. Also, a team member may wish to write the question down as it is being asked. This minimizes confusion by forcing a team not only to "hear" the question but also to "see" it. After understanding what is being asked, the challenge becomes formulating a response. Teams may want to have a previously agreed upon strategy about who will answer at least the first question to get off to a good start. Teams may also employ the following strategies:

    • Huddling. The team literally huddles to pool knowledge and to decide who should answer the question. One respondent's answer can address one facet of the question, and a second respondent's another facet. Or a thought expressed by the first respondent can receive elaboration from a second. Just be sure the second respondent doesn't undermine or contradict the first. When done well, huddling promotes cooperation and teamwork. Huddling can also hurt a team by slowing it down and taking time better spent on formulating a good answer. Here, too, practice can help.
    • Designating. Team members respond to questions, or aspects of questions, in their designated area. The challenge here is to ensure the participation of the entire team. This can be helped by having one respondent begin with his contribution to the first question, having another respondent take the lead with the second question, and so on. It also can be helpful to designate a team captain or leader not only to monitor the contributions of fellow contributors, but also to galvanize the team during periods of distress or paralysis.

    Benchmark questions

    All teams are also strongly encouraged to think through answers to the following advance policy questions. Judges are required to ask at least one of them:

    • Some economists argue that the economy is self-correcting and there is no need for active monetary policy. Explain their argument. What are the best arguments against this view?
    • What are the Fed's most important goals? Explain why each of these goals is important.
    • Some people think that the Fed's only goal should be price stability.
    • What are the arguments for and against this view?
    • What is the "output gap" and how does the Fed use the output gap in its monetary policy decisions?
    • Discuss the concept of NAIRU (non-accelerating inflation rate of unemployment). How should the Fed pay attention to the concept of NAIRU in its policymaking?
    • In making decisions about U.S. monetary policy, in what ways should the Fed take into account the health of economies in other countries?
    • What is the difference between fiscal policy and monetary policy? How does fiscal policy affect output? In what ways does fiscal policy affect monetary policy decisions?
    • How does the policy of raising or lowering the federal funds rate affect output, employment, and inflation?
    • What actions can the Fed take to stimulate the economy when the federal funds rate is close to zero?
    • The Federal Reserve has recently used nontraditional policies, resulting in an expansion of the Fed's balance sheet. What are the risks of these nontraditional policies and what are some exit strategies?
    • What is the role of inflation expectations in determining inflation? How can a central bank influence inflation expectations?

    High School Fed Challenge Finals Questions 2012-2013

    • Why would the Fed want to raise inflation expectations when short-term interest rates are near zero?
    • How does the Large Scale Asset Purchase program boost economic growth?
    • In October 2012, the FOMC indicated that the federal funds rate would likely stay low at least through mid-2015. Three months later, it said that the federal funds rate will stay low at least as long as the unemployment rate remained above 6-1/2 percent and expected inflation was projected to be no more than a half percentage point above 2 percent. What was the rational for this change?
    • Assume inflation is stable at 2 percent, but home price inflation is at 10 percent and accelerating. Do you think this development should cause the Fed to tighten policy?
    • The health of the labor market can be measured with the unemployment rate or the employment-to-population ratio. Which one should the Fed follow if they start moving in opposite directions?
    • It has been nearly four years since the official end of the recession yet the pace of the expansion remains sluggish and the unemployment rate remains relatively high. What factors are responsible for this slow recovery?

    High School Fed Challenge Finals Questions 2011-2012

    • What distinguishes quantitative easing from conventional monetary policy?
    • When the Federal Reserve undertook QE2 the exchange value of the dollar fell and the Fed was criticized for debasing the dollar. What is your view of this criticism?
    • What relationship, if any, is there between the overall level of resource utilization and inflation? Discuss your preferred measure of the overall level of resource utilization.
    • Is the United States on an unsustainable fiscal path? What advice would you give to Congress and the administration as to how to put the nation on a sustainable path?
    • When the Federal Reserve is ready to tighten policy how should this be done and over what time frame?
    • Does the financial sector health and stability matter for monetary policy decisions? Explain why.
    • Should the Federal Reserve be concerned about the stressful conditions in many European economies? Please explain your view.
    • Explain whether you think it is important to have a Central Bank that is independent from the rest of the Federal government.
    • The Federal Reserve generally focuses on core inflation instead of mainly on headline inflation. What are the differences between these measures? Which would be your preferred measure and why?

    High School Fed Challenge Finals Questions 2010-2011

    • What is your assessment of the outlook for growth and the labor market?
    • What is your assessment of the outlook for inflation?
    • Economists talk about the "balance of risks" to growth and inflation - by which they mean weighing risks to both the Fed's employment and inflation objectives. Please explain and justify your assessment of the "balance of risks" at the present juncture.
    • What effect does the rise in oil prices have on your view as to the economic outlook and what are the monetary policy implications?
    • If Congress and the White House reach agreement on significant fiscal consolidation what would be the implications for the outlook and for monetary policy?
    • There is a lot of talk about inflation expectations at present. What are they and what role do they play in the inflation process?
    • At the appropriate moment, the Fed will have to begin normalizing policy again. Please explain what exit strategy you expect to deploy.
    • The Fed has a dual mandate, but some in Congress think the law should be changed to give it a single mandate expressed in the form of an inflation target instead. What difference if any would this make to the conduct of policy?
    • What role should international considerations, including the value of the dollar, play in monetary policy?
    • What is the relationship, if any, between monetary policy and financial stability?

    To focus the attention of teachers and students on the most important subjects, learning goals have been listed. Use these to guide your study and preparation as the judges may use them in formulating their questions.

    Money, Income and GDP


    • how money serves as a medium of exchange (liquidity) and a way to store and hold wealth.
    • that money can take different physical and electronic forms.
    • that money works because it is widely accepted and trusted to serve its functions.
    • that GDP is total current production of all final goods and services in the economy;
        = value of total spending in the economy
        = value of total income including wages, profits, interest, rents.
    • the difference between real and nominal GDP.
    • that a rise in GDP is associated with decreases in unemployment, and increases in income of individuals and households; that a decline in GDP is associated with increases in unemployment and decreases in household income (called recession).

    • the current growth rate of real and nominal GDP and how it compares to previous periods.
    Financial Firms and the Financial System


    • that a person's saving is his or her current income minus what is spent on goods and services
    • why a person might want to save (not spend) all current income.
    • why a person or business might want to borrow.
    • the role of interest rates as the return to savers for supplying funds and the price to borrowers of obtaining them.
    • the difference between real and nominal interest rates.
    • the role of banks and other financial firms as a way of collecting funds from savers and making them available to borrowers.
    • why the functioning of financial markets is important to GDP and unemployment.
    • how the failure of one or more large financial institutions can affect other (healthy) institutions and set off a decline in confidence that may cause a financial crisis where lending/borrowing and spending/production stop functioning effectively.
    • the role that oversight/regulation of financial firms provides in preventing such events.


    • that an unemployed person is actively seeking a job but can't find one at current wage rates.
    • how sticky or sluggish wages and prices can result in unemployment above or below the rate associated with “full employment”.
    • why unemployment is costly to individuals and the economy.
    • how unemployment generally fluctuates along with GDP (see above).
    • that there is a level of unemployment associated with stable inflation, called the non-accelerating inflation rate of unemployment (NAIRU) and that unemployment under this level is associated with rising inflation and above it with declining inflation.

    • current estimates of the NAIRU and compare to current unemployment rate
    • the current unemployment rate and how it compares to previous periods.


    • that inflation is defined as an increase in the overall price level.
    • that inflation erodes the stored value of money, complicates exchange and production decisions, increases uncertainty about value and relative prices and undermines trust in economic institutions.
    • that deflation is defined as a decrease in the overall price level.
    • that deflation creates a disincentive for current spending, increases the burden of debt, and makes it harder for the Fed to stimulate economy because interest rates can't be reduced beyond zero.
    • the difference between core and headline inflation
    • how expectations about future inflation can impact current inflation.

    • the current level of core and headline inflation and compare to previous periods.
    Monetary Policy, Financial Stability and the Role of the Federal Reserve


    • the basic structure of the Federal Reserve System and its relationship to Congress.
    • the importance of an independent central bank.
    • the Fed's goals (dual mandate): sustainable (full) employment; and price stability.
    • why, in the short run, the Fed has to balance sustainable full employment and price stability
    • why changes in spending and production don't always change prices immediately.
    • what is meant by potential output and the output gap.
    • how the Federal Reserve can change the supply of money (liquidity) in the economy.
    • which types of spending are especially sensitive to interest rates.
    • the impact of Federal Reserve issuing/constraining money on the output gap and dual mandate.
    • the relationship between Federal Reserve policy and inflation expectations.
    • the Federal Reserve's role in maintaining financial market stability.
    • your policy recommendation; including but not limited to a discussion of GDP, inflation, and unemployment in framing your answer.








    Related External Content
    Adrian Franco
    Program Director
    212 720-7499

    Hannah Nudell
    Senior Education Policy Associate
    212 720-8557

    Maria Carmelita Recto
    Economic Education Analyst
    212 720-7965