According to The Economics (a website that publishes economic articles), the fisher effect is an economic-based theory developed by an economist known as Lrving Fisher. Further, Lrving Fisher is categorized as a neoclassical economist whose work on debt inflation is honored by the Post-Keynesian school. The main purpose of the theory was to define how inflation relates to nominal and real interest rates. Therefore, the theory enables economists to obtain real interest rates by subtracting inflation from nominal rates. Besides, the fisher effect is important to the economy because it explains how nominal interests and inflation rates are influenced by money supply. For example, if the monetary policy decides to adopt ways that lead to an increment in inflation rates, nominal interest rates will also increase in the same intervals.