Identify what range of the aggregate supply curve your country is operating in. The second is the fact that deep level of diversity may differ even with the same "surface level". In integrated management based on stereotypes, it is impossible to draw out the best of each individual in the true sense of the word.
Higher interest rates increase the cost of borrowing to finance expenditure. They increase the incentive to save, or to delay spending, and they reduce the net (after-interest) returns to investment. For households, the biggest single investment decision is likely to be the decision to buy a house. Although interest rates are not the only factor in this decision, a rise in mortgage rates will tend to have the effect of encouraging some households to delay the purchase of a home, or to reduce the amount that they can spend on a home. This sort of calculation is probably very familiar to most people: aspiring home-buyers have a limited capacity to meet interest payments and, when interest rates fall, the size of the loan they can afford increases.
For the business sector, it seems plausible to think that interest rates will have a direct effect on the incentive to invest. The mechanism for this is through their effect on the ‘hurdle rate’, or required rate of return on investment. When the cost of finance is high, fewer investment projects might be expected to generate sufficiently high rates of return to justify going ahead; whereas when interest rates are lower, more such projects will be undertaken. On this basis, we would expect aggregate business investment to be responsive to changes in the general level of interest rates. The operation of this kind of mechanism in practice, however, is quite hard to detect, because there are so many other important factors driving investment at the same time. In particular, investment is strongly influenced by the economic cycle, which affects both the demand for a firm's products and the cash available for investment from profits. These factors are also influenced by monetary policy, and it is probably through these indirect channels that monetary policy has its most important effects on business investment.