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

When interest rates decrease, borrowing money becomes cheaper for both consumers and businesses. This means people are more likely to take out loans to buy things like houses, cars, or to pay for education. Businesses also feel encouraged to invest in new projects or expand their operations because they can borrow money at a lower cost. As more people spend money and businesses invest, overall demand for goods and services in the economy increases, which is what we call aggregate demand. For example, if a family decides to buy a new car because the interest rate on loans is low, that purchase adds to the total demand in the economy, helping it grow.