How does a central bank's decision to lower interest rates typically affect aggregate demand in the long run?

When a central bank lowers interest rates, it makes borrowing money cheaper for individuals and businesses. This encourages people to take out loans for things like buying homes or starting businesses, which increases spending in the economy. As more money is spent, the demand for goods and services rises, leading to higher aggregate demand. For example, if a small business can borrow money at a lower interest rate, it might decide to expand its operations, hire more workers, and invest in new equipment. Over time, as businesses grow and consumers spend more, the overall economy can benefit from this increase in demand.