How does a decrease in interest rates typically affect aggregate demand in an economy?

When interest rates decrease, borrowing money becomes cheaper for people and businesses. This means that more individuals are likely to take out loans to buy homes, cars, or start new projects, which increases their spending. As businesses also find it easier to borrow, they might invest in new equipment or expand their operations, leading to more jobs and higher income for workers. For example, if a company can take a loan at a lower interest rate to build a new factory, it will likely hire more employees, which boosts overall spending in the economy. As a result, the total demand for goods and services rises, contributing to economic growth.