In the context of macroeconomics, how does an expansionary monetary policy affect interest rates and aggregate demand?

An expansionary monetary policy is when a country's central bank, like the Federal Reserve, decides to increase the money supply in the economy. When this happens, interest rates tend to go down because there is more money available for banks to lend. Lower interest rates make it cheaper for people and businesses to borrow money, which encourages them to spend more. For example, if a family can get a loan for a new car at a lower interest rate, they are more likely to buy that car, increasing overall spending in the economy. As a result, this increase in spending boosts aggregate demand, which is the total demand for goods and services in the economy.