This paper will discuss the tools of monetary control used by the Federal Reserve to change the supply of money in turn affect the macroeconomics factors such as gross domestic product, inflation rate, interest rate and unemployment rate. The goal is to find the combination of monetary policy that best achieve a balance between the economic growth, low inflation, and a reasonable rate of unemployment. This paper will also reflect how macroeconomic factors changes in given economic situations through the results obtained in the Monetary Policy Simulation. Monetary policy is a system by which the government, central bank, or monetary authority manages the money supply to achieve specific goals. Constraining inflation or deflation, maintaining an exchange rate, achieving full employment or economic growth is some of the specifics the Federal Reserve manage utilizing the monetary policy. This policy plays a major role in the economy. The tools used by the Federal Reserve to control money supply and distinguish the effect it has on the economy are the spread between the disco......

Word Count: 1826
Page Count: 7.3 (250 words a page / double spaced)

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