What happens to the interest rates in an economy when the central bank increases the money supply?

When the central bank increases the money supply, it means there is more money available in the economy. With more money available, people and businesses can borrow more easily, which usually leads to lower interest rates. Lower interest rates make it cheaper to borrow money, encouraging spending and investment. For example, if a central bank increases the money supply, a bank might lower the interest rate on loans from 5% to 3%, making it more attractive for people to take out loans to buy homes or start new businesses. Overall, increasing the money supply can stimulate economic activity by making borrowing less expensive.