Banks will lower interest rate to motivate borrowing. This will increase investment and consumption and therefore aggregate demand will increase. The supply of money is vertical which implies that quantity of money supplied is independent of the interest rate. If the Fed increases the Money supply then Money supply curves shifts to the right. The quantity demanded at the original interest rate, because of the increases supply of money, there is now more money in the hands of the public, so people are able to hod a greater quantity of money.
Monetary policy influences the market interest rate, which affects the level of planned investment.
If the Fed believes that the economy is operating well below its potential level of output and decides to increase the Money supply to stimulate output and employment. If the quantity of money is stable or at least predictable, then changes in the money supply have predictable effects on nominal income.