A horizontal line showing the current rate of inflation,as determined by past expectations and pricing decisions,is called the
A) aggregate demand (ADI)curve.
B) long-run aggregate supply line.
C) inflation adjustment (IA)line.
D) expenditure line
E) short-run equilibrium output linE.

Question

Quizplus · Accepted Answer

The horizontal line showing the current rate of inflation is called the inflation adjustment (IA) line. It represents the adjustments that firms make to their pricing decisions based on past expectations of inflation. The other options listed do not accurately describe this concept.

A Horizontal Line Showing the Current Rate of Inflation,as Determined