Marcoeconomics: Shift is aggregate supply and/or demand

Question

The Federal Reserve has announced that they are cutting interest rates for the third time this year. Draw the effects in the aggregate supply and demand market. 

Answer 1

Just draw an aggregate demand shift to the right. This is because it is now cheaper to borrow and firms will borrow more and spend on investment. Further, when interest rates fall, there is less incentive for households to save, and more incentive to spend, which increases consumption. Both private investment and consumer spending are parts of AD, which increases AD.