Step-by-step explanation:
The banking sector provides the money to the people and is the supplier of credit. If the interest rates are reduced then, the bank will grant more loans.
What are interest rates?
Interest rates are the amount of loan that is levied by the loan providers as interest in an annual percentage to the borrowers.
If the interest rates are decreased by the fed then the bank will grant more loans, and the supply of money will increase.
The borrower and spending of money in business will become more and lead to increased job opportunities. The increased incomes and jobs will result in more purchasing of homes, cars, etc.
Therefore, the economy will increase, and the inflation rate will decrease