Consider the case where the Reserve Bank cuts its policy rate. It does this to Answer 1 Question 3 spending. This effect on spending happens because lower interest rates mean Answer 2 Question 3, and therefore Answer 3 Question 3. As a result, aggregate demand (AD) will Answer 4 Question 3. Also, a lower interest rate will lead to Answer 5 Question 3. This makes Answer 6 Question 3, which Answer 7 Question 3 AD