dynamic aggregate demand (DAD) curve is a negatively sloped line
with inflation measured along the vertical axis and income measured
along the horizontal axis. This line indicates which demand-side
equilibrium levels of income obtain at different inflation rates.
The DAD curve is a generalization of the Mundell-Fleming model.
It is useful to derive the DAD curve from the Mundell-Fleming model
in two steps:
shows how the aggregate demand (AD) curve is derived from the
shows how the AD curve is modified into the DAD curve.