In general, the IAT sensor is a thermistor that measures cahnges in air temperature. As the temperature of the engine increases the resistance of the sensor decreases. The thermistor usually receives a 5 volt reference voltage through a set of pull up resisters in the ECM. The sensor will vary from about 4.7V cold to 0.4V hot. This signal is used to control fule delivery and sprk timing.

Most vehicles have a minimum and maximum temperature operating range. If the ECM detects sensor readings out of these parameters, a code will set for an open or short in that circuit. An example is an IAT sensor that is unplugged will result in a 5V signal to the ECM. As this is out of range, the ECM will set a code for an open circuit.

To diagnose, first check the elctrical connections to the IAT, then when the engine is cold (= ambient), a DVM should read about 3.5V for 50*F ambient, 3.07V for 68*F, etc, the voltage should decrease as temperature rises.

You should replace ASAP if it is bad.

This is a general diagnosis for most IAT sensors.