The purpose of the AD curve and the IA line is to
A)derive potential GDP.
B)show the relationship between interest rates and potential GDP.
C)explain how movements in real GDP and the rate of inflation are related.
D)show the relationship between real GDP and interest rates.
E)explain spending balance.

Question

Quizplus · Accepted Answer

The AD curve (Aggregate Demand) and the IA line (Inflation Adjustment) are used to illustrate how changes in real GDP and the rate of inflation interact, helping to analyze economic fluctuations.

The Purpose of the AD Curve and the IA Line