How does lowering interest rates affect supply and demand ?

1.It increases the cost of borrowing. This allows businesses to reduce investments, increasing the supply of goods for consumers to buy.


2.It increases the cost of borrowing for businesses but not consumers. This makes it more costly for businesses to create new jobs, but it increases consumer demand.


3.It has no effect on interest rates, consumer demand, or the ability of businesses to supply goods. Interest rate levels are unrelated to borrowing decisions by businesses and consumers.


4.It reduces the cost of borrowing. This increases demand, because consumers can spend more by using credit.