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Monetary policy plays an important role in today's economy. The role of monetary policy is to strike a balance among the key macroeconomic variables in the changing times of today. The importance of this paper is to learn how monetary policy affects our money supply and what tools the Federal Reserve uses to control the money supply. One will also learn how the changes in the tools that the Federal Reserve uses affect the GDP, inflation rate, unemployment, and interest rates. The most appropriate monetary polices that the Federal Reserve uses to help control the economy are also discussed.
The supply of money consists of Federal Reserve notes, coins, and checkable deposits. Money supply is created by the U.S. Bureau of Engraving, which produces the Federal Reserve notes, U.S. Mint, which produces coins, and banks, thrifts, and loan officers who create checkable deposits. Checkable deposits make up more than half of the nation's money supply. They are created by the purchase of......

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Approximate Word Count: 1466
Approximate Pages: 6 (250 words per double-spaced page)

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