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Simply speaking, in the short run, under the assumption of sticky price, output is determined by the aggregate demand (however, in the long run, output is decided by supply which in turn depends on these factors, like labour, capital, education, and technology...), and output can be seen equal to income. Based on Mundell-Fleming model (which is just a similar model as IS-LM in open economy, lower interest rate (say as a result of expansionary monetary policy) will raise the investment, thereby expanding aggregate demand, on which output is determined in the short run.
However, it is worth noticing that low interest rate will therefore reduce saving by individuals and this repercussion reduces level of capital within a country in the long run. Hence, a continuous low level interest rate in the long run will be detrimental to a country`s economy, worsening output rather than improvement.
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