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Suppose the Fed announces that it is lowering its target interest rate by 75 basis points, or 0.75 percentage points. To do this, the Fed will use open-market operations to purchase the securities of the public.
Suppose the following graph shows the aggregate demand curve for this economy. The Fed's policy of targeting a lower interest rate will lower the cost of borrowing, causing residential and business investment spending to increase and the quantity of output demanded to increase at each price level.
The Fed's policy of targeting a lower interest rate will reduce the cost of borrowing, causing residential and business investment spending to increase, and the quantity of output demanded to increase at each price level.
The aggregate demand curve will therefore shift to the right.
So, the image attach shows the money market in the United States, which is currently in equilibrium. When the Fed lowers its target interest rate, the money demand curve remains the same, but the money supply curve shifts to the right.