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They should be closed "up" for two reasons.

1.) If they're on a South wall, they will deflect the suns rays upwards towards the ceiling instead of directing the heat towards the floor. It will help to keep your home cooler, and help to prevent your floor/carpet from fading.

(Check this on a sunny day and you will see a difference)

2.) Security. You can't see peoples feet etc. if the blinds are closed in the up position. (Check this for yourself)

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Q: Which way is the correct way to close window blinds?
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