True or False? Because the central bank uses the nominal interest rate as its policy instrument, the nominal interest rate is the transmission mechanism of monetary policy.

When a central bank has driven down short-term nominal interest rates to nearly zero, the monetary policy can do nothing more to stimulate the economy. True or false? Explain.

“Monetary policy is the macroeconomic policy laid down by the central bank of an economy.”In terms of the above statement, explain how monetary policy can be used to combat inflation