Graphically,the Intersection of the Aggregate Demand (ADI)curve,the Inflation Adjustment (IA)line,and

question 193

Multiple Choice

Graphically,the intersection of the aggregate demand (ADI) curve,the inflation adjustment (IA) line,and the long-run aggregate supply curves determines

• A) the recessionary gap.
• B) the expansionary gap.
• C) the central bank's policy reaction function.
• D) short-run equilibrium.
• E) long-run equilibrium.

---

Definitions:

Foreign Exchange Market

A global marketplace for exchanging national currencies against each other.

Financial Market

An arena where buyers and sellers participate in the trade of assets such as equities, bonds, currencies, and derivatives.

Triangle Arbitrage

A trading strategy that takes advantage of discrepancies between three currencies in the foreign exchange market to make a profit.

Currency Exchange

The process of converting one country's currency into another's, facilitating international trade and investment.