The Purpose of the AD Curve and the IA Line

question 146

Multiple Choice

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.

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Definitions:

Factored Accounts Receivable

The process of selling accounts receivable to a third party at a discount to quickly generate cash and reduce risk of non-payment.

Commission

A fee paid for services, usually a percentage of the total cost, to an agent or employee for facilitating or completing a sale.

Factoring Transaction

A financial transaction where a business sells its accounts receivable to a third party (the factor) at a discount.