The monetary transmission mechanism is the process where general economic conditions and asset prices are affected due to the monetary policy decisions. It occurs through interest rate channels that influence the costs of borrowings, the levels of investments, and aggregate…

The Fisher effect was developed by an economist named Irvin Fisher. This effect is directly connected to the neutrality of money. It states that the real interest rate is stable in an economy and that changes in nominal interest rates…

The money creation process is very helpful in understanding the role of money in the economy. The strength of money creation is influenced by the amount kept in the bank as a reserve for meeting customers’ withdrawal requests. Banks usually…