This paper will focus on the direct effects of the Federal System and the monetary policy that affects the economy and macroeconomics on business operations and daily life. By discussing the tools used by the Fed to control money supply, and the creation of money, which in turn influence economic factors like GDP, unemployment, inflation, and interest rates. The combinations of the monetary policy, the Federal Reserve process, along with the relationship of banks and the creation of money, will show how all aspects of the economy and is necessary in maintaining control, stability, and prosperity. Money exists in all economic transactions and affects the economic activity in society. The definition of money has varied. Before commodity money evolved, people used the system of bartering to exchange or pay for goods and services. From there evolved the physical commodities like gold and silver as a form of payment. As time went on people realized that, it was unrealistic and inconvenient to carry gold and many countries throughout the world eventually developed the concept of com......

Word Count: 1814
Page Count: 7.2 (250 words a page / double spaced)

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