Increasing interest rates will always lead to a decrease in aggregate demand because higher borrowing costs discourage investment spending.

When interest rates increase, it becomes more expensive for people and businesses to borrow money. This means that individuals might think twice before taking out loans for things like buying a house or a car. Similarly, businesses may delay or reduce their investments in new projects or equipment because the cost of financing those investments is higher. For example, if a company wants to expand its factory but faces higher interest rates on loans, it might choose to hold off on that expansion, leading to less overall spending in the economy. As a result, the total demand for goods and services, known as aggregate demand, tends to decrease when interest rates rise.