ABSTRACT
This chapter identifies and describes the various channels through which new money can be introduced into the national economy. It presents the different economic effects that are caused by different mechanisms of increasing the money supply and what it means for the economy and the business cycle. The literature offers no such classification, and it appears that the most complete systematization is still the one made by Cantillon in the 18th century. The presented considerations and data prove that the first-round effect is of significant importance to the economy and can explain many economic phenomena. The chapter shows that what matters for the economy is not only an increase in the money supply, but also its method.
