AP Macroeconomics Assignment: 

1. The first part of the AD/AS model typically discussed is the AD curve, which is downward sloping. A. List and explain three reasons given for why the AD curve is downward sloping. (6 points) B. An economy where these effects (from your answer above) are strong will generally have a flatter AD curve, since changes in the price level will have a large effect on the associated level of RGDP. i. Will the aggregate quantity of goods and services demanded become more sensitive or less sensitive to changes in the price level if an economy becomes closed (that is, as foreign trade disappears)? In terms of the AD/AS diagram, will the AD curve become steeper or flatter? (6 points)