Unit 2: Australia lowers interest rates

...according to the BBC

http://www.bbc.co.uk/news/business-15532567

1. Explain what is meant by the term ‘interest rate’. (2)
2. Using an AD/AS diagram, explain how a cut in interest rates is expected to affect the macro-economy. (6)
3. Discuss how effective this cutting of interest rates is likely to be in ‘boosting economic growth’. (18)