Fixed-rate loans can affect the economy by changing how much people borrow and how monetary policy works. When more people have fixed-rate loans, they pay higher interest rates and borrow less. This can make the financial sector less important in the economy. However, total output stays about the same because people work more to make up for their financial losses. The effects of fixed-rate loans on monetary policy are different in the financial sector compared to the real economy. In the financial sector, interest rates and loans change more with monetary policy when more people have fixed-rate loans. But these changes don't affect the real economy much - output, consumption, and prices react the same to monetary policy no matter how many people have fixed-rate loans.