The figure below plots real and potential GDP between 1971 and 1977. Given the data in the corresponding table, can changes in the rate of inflation over this period be explained by the percent deviation between real and potential GDP? Do these data support or refute the validity of the assumptions about the IA line? 
Definitions:
Profit-maximizing
The approach by which an organization figures out the best pricing and output quantity for the highest profit.
Product Variety
The assortment of different products or services offered by a company or available in a market.
Monopolistic Competition
A market structure where many firms sell products that are similar but not identical, allowing for competition but with some level of market power.
Pure Competition
A market structure characterized by a large number of small firms, similar products, and very little control over price.
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