As interest rates will shift the aggregate demand curve to the left and decrease output demanded.
The interest rate is the amount that the lender charges the borrower and is the principal - a percentage of the loan amount. Loan interest rates are usually quoted on an annual basis known as the annual rate (APR).
Interest rate shows the exact amount of interest a person earns or pays on a loan. For example, a $100 loan with a nominal interest rate of 6% accrues interest of $6 ($100 X 0.06). The interest rate stays the same no matter how much you borrow. Even if the loan increases to $1,000, the borrower still pays 6%.
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