This study establishes a regression model using Keynesian theory and statistics methodology, in order to determine whether money supply plays a significant role in economic activity. This paper utilizes IS-LM model, AD-AS model and external balance of payment curve BP as the base theory to analyze how money supply affects interest rate, exchange rate, price and national income (ODP) in Taiwan. Taiwan official statistic data in every quarter over the past 35 years (1 974-2009) is also obtained and utilized in SPSS statistic methodology, in order to verify the interrelation between the dependant factors. According to the base theory and tested analysis results, there is a positive correlation between money supply and price and national income. Furthermore, there is negative correlation between money supply and interest rate and exchange rate. Under a floating exchange rate, an increased money supply will directly increase income and the effect can be more substantial with domestic currency devaluation. Under the represent statistical significance at α<0.05, money supply has a significant relation with ODP, interest rate, price, and exchange rate Therefore, the tested analysis result is consistent with the results of the IS-LM model, Complete Keynesian model (AD-AS), and open system floating exchange rate theory. At the present time of regression during the world financial tsunami, this paper can be of some reference to industries, governments, and academics in Taiwan.