The extremely large number of money exchanges that occurs each day all over the world form a highly complex web that is very resistant to analysis. However, it must be understood that the basis rules of money creation that govern these exchanges are quite simple, and readily understood by the average person. How money works is not complex, however the effects it has on the macroeconomics factors such as GDP, unemployment, inflation, and interest rates can become very complex indeed. This paper will discuss monetary policy and its effect on macroeconomic factors such as GDP, unemployment, inflation, and interest rates. The paper will also explain how money is created. Ultimately, the goal of this paper is to which combination of monetary policy will help best achieve a balance between economic growth, low inflation, and a reasonable rate of unemployment. Money The matter of money creation is poorly understood. There is a common misconception that banks or governments create money. I decided to do a poll on average day to day people about how money is created. I asked a thi......

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