"Macroeconomics is a branch of economics concerned with the performance, structure, and behavior of a national economy as a whole. Macroeconomists seek to understand the determinants of aggregate trends in a economics with particular attention to income, unemployment, inflation, investment and international trade" (Wikipedia, 2007). The government tends to use a combination of both monetary and fiscal options when setting policies that deal with the macroeconomy. According to McConnell & Brue (2004), governments make adjustments through policy changes that they hope will stabilize the economy. Governments believe that successful adjustments are necessary to maintain stability and continue growth. Stabilizing the economy requires (1) an appropriate fiscal policy consisting of deliberate changes in tax collection on government spending aimed at achieving full employment, controlling inflation, and encouraging economic growth. (2) Intelligent management of money supply regulation (monetary policy). This paper focuses primarily on the monetary system in the macroeconomic context and will identify the tools used by the Federal Reserve to control the money supply, the macroeconomic factors, and the monetary policy combinations that best strike a balance between economic growth, low inflation, and a reasonable unemployment rate. How is money created and what is the money supply? According to Schwartz (2002), the definition of money has varied, most commonly silver or gold served as money. Later, when paper money became......half of paper....../wiki/MacroeconomicsSchwartz, A. (2002). The Library of Economics and Freedom-Money Supply. Retrieved October 12, 2007, from http://www.econlib.org/library/Enc/MoneySupply.htmlHewitt, M. (2007). Dollar Dare: composition of the money supply in the United States. Retrieved October 13, 2007, from http://www.dollardaze.org/blog/?p=215McConnell, C. & Brue, S. (2004). Economy: principles, problems and policies. [University of Phoenix Custom Edition Electronic Text]. New York: McGraw-Hill Irwin. Retrieved October 13, 2007, from University of Phoenix, rEsource, Forces Influencing Business in the 21st Century Web site.Obringer, L. (2007). How Things Work: How the Fed Works. Retrieved October 14, 2007, from http://money.howstuffworks.com/fed10.htm