Respuesta :

A decrease in u.s. interest rates causes the dollar to decrease the currency's value and aggregate demand to increase.

Interest rates are the rates at which the banks lends to the customer. It is usually controlled by the central bank.

Whenever the Interest rates decreases the interests are available at a cheaper rates and hence more money is supplied to the market. When more money is available in the market it decreases the value of dollar.

As consumers have more money in hand the purchasing power also increase and hence the demand also increases.

When interest rates are increased a complete opposite scenario occurs.

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