Section 2 — How Money Works Grammar focus

Session 6 Grammar: Cause and effect language

Monetary policy is all about cause and effect — a central bank acts, and the economy responds. This grammar lets you explain those relationships precisely and persuasively.

Grammar Focus

leads to / results in / gives rise to / is a consequence of

Cause-and-effect language is the core grammar of economic analysis. Use it to explain why things happen, what follows from a policy decision, and how financial forces connect. The direction matters: leads to / results in / causes go forward (cause → effect). Is caused by / stems from / is a consequence of go backward (effect → cause).

Forward: [cause] leads to / results in / gives rise to [effect]
Backward: [effect] is caused by / stems from / is a consequence of [cause]

Raising interest rates leads to higher borrowing costs, which results in reduced consumer spending and slower economic growth.

Quantitative easing gives rise to concerns about long-term inflation, even when its immediate effect is to stabilize credit markets.

The sharp rise in asset prices is largely a consequence of a decade of ultra-low interest rates and successive rounds of QE.

Loose monetary policy causes capital to flow into riskier assets as investors search for yield — a process known as the "reach for yield."

The currency depreciation stems from a loss of confidence in the central bank's ability to control inflation — credibility, once lost, is hard to restore.

Higher rates result in a stronger currency, which in turn leads to weaker export competitiveness — a trade-off central banks must manage carefully.

More cause-and-effect connectors

therefore as a result consequently this means that because of this