Reference Ref 123 there will be no change since the real rat

Reference: Ref 12-3

there will be no change since the real rate of interest does not change.

Interest Rate PolicyInterest Rate Policy Rule B Inflation Rule A 12 15.5

Solution

the AD curve will shift to the right.

Decrease in interest rate induce people to keep money with themselves so AD curve shifts rightwards as people start spending more on consumption of goods and services.