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What must be true of the slope of the AD line from the “Keynesian Cross” diagram...

What must be true of the slope of the AD line from the “Keynesian Cross” diagram in order for the DD curve to be flatter? Explain. Interpret your result intuitively.

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The DD curve is an upward sloping curve that indicates the goods market equilibrium by relating the exchange rate and the GDP. It is derived from the keynesian cross diagram where the aggregate demand and the 45 degree line meet to determine the GDP. The flatter the aggregate demand curve is, deflator will be the construction of DD curve because both are upward sloping. Now the aggregate demand curve is flatter when the slope of the curve is relatively low. This can happen when the exchange rate sensitivity is low. This will make the DD curve flatter as well.

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