Explanations regarding why the aggregate demand

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a) Please provide three explanations regarding why the aggregate demand (AD) has a negative slope according to the Keynesian model.

b) Suppose that the aggregate supply (AS) is flat (i.e., a horizontal line and this may indicate the economy is operating under its full capacity), how does a currency depreciation affect equilibrium real GDP? [Hint: you need to explain how AD shifts given the currency depreciation]

Reference no: EM13886605

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