Final answer:
Lowering interest rates is a method offered by lenders to allow borrowers a way to lower the interest rate on a loan. This strategy can stimulate borrowing and spending in the economy.
Step-by-step explanation:
Lowering interest rates is a method offered by lenders to allow borrowers a way to lower the interest rate on a loan. When lenders lower interest rates, it becomes more attractive for borrowers to take out loans because they can save money on interest payments. This can help stimulate borrowing and spending in the economy.
For example, when credit card firms lower their interest rates to attract more business, it encourages consumers to borrow and spend more. This strategy can push the interest rate down toward the equilibrium level, where the supply of loans matches the demand from borrowers.
Overall, lowering interest rates can be a beneficial strategy for both lenders and borrowers.