First,briefly Explain Why the AD Curve Is Downward Sloping in a Closed

question 17

Essay

First,briefly explain why the AD curve is downward sloping in a closed economy.Second,briefly explain why the AD curve is downward sloping in an open economy under fixed exchange rates.And finally,briefly compare the size of the slopes of the two AD curves.

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Definitions:

Drive-Reduction

A theory in psychology that explains motivation as being based on the goal of reducing needs created by physiological drives or states.

Homeostatic

Pertaining to homeostasis, the regulation of internal conditions within an organism to maintain stable, constant conditions for survival.

Bodily Needs

Basic physiological requirements for human survival, such as food, water, shelter, and sleep.

Reciprocity

The practice of exchanging things with others for mutual benefit, especially in social and emotional contexts.