An economic policy simulation model is developed by using the MAS (MultiAgent System) technique. The model is composed of five categories of agents i.e. the resident agent, the bank agent, the government agent, the market agent and the industry agent, and their features are fully utilized for the agents’ cooperation and communication. The effect of monetary policy is designed as micro individual knowledge acquirement, decision making and macro overall volume control. The results obtained demonstrate the validity and applicability of the proposed model, and demonstrate that the  interest rate mechanism has a significant effect on money supply and total output under a certain industrial scale. The simulation experiment also indicates that the model is able to provide a reference to the decisionmaker.