Archives: Terms

Definition of Intensity of Preference Intensity of preference refers to the strength of an individual’s desire or preference for one option over others. In economics, this concept helps to explain how consumers make choices between different goods or services based on the utility or satisfaction derived from each. It illustrates […]

Definition of Institutional Complementarity Institutional complementarity refers to the way different institutions – such as legal systems, financial systems, cultural norms, and educational structures – interact and reinforce each other, potentially leading to more efficient outcomes. This concept suggests that the performance and effectiveness of one institution can be enhanced […]

Definition of Input–Output Model An input–output model is a quantitative economic technique that represents the interdependencies between different branches of a national economy or different regional economies. Developed by Wassily Leontief in the 1930s, this model is based on the premise that the output from one industry or sector can […]

Definition of Information Economics Information economics is a branch of economics that studies how information and information systems affect an economy and economic decisions. It deals with the significance of information in the market, including its production, dissemination, and consumption. Information economics explores how information asymmetries and uncertainties influence market […]

Definition of Information Asymmetry Information asymmetry occurs when one party in a transaction has more or superior information compared to the other. This imbalance can lead to a misallocation of resources, where decisions are made based on incomplete or inaccurate information. In the context of markets, information asymmetry can lead […]

Definition of Inflation Targeting Inflation targeting is a monetary policy strategy used by central banks to maintain inflation rates within a specific target range. This strategy involves the central bank making public a projected, or “target,” inflation rate and then adjusting monetary policy tools—such as interest rates, reserve requirements, and […]

Definition of Inflationism Inflationism is an economic doctrine advocating for a substantial increase in the money supply or lowering of interest rates, to stimulate economic growth. This approach is based on the belief that increasing the amount of money in circulation will lead to an increase in spending, investment, and […]

Definition of Inelastic Demand Inelastic demand refers to a situation where the quantity demanded of a good or service changes by a smaller percentage than changes in its price. This means that consumers’ demand for such goods or services is relatively unresponsive to price changes. Inelastic demand is often associated […]

Definition of Induced Demand Induced demand refers to the phenomenon where an increase in the supply of a good or service leads to an increase in its consumption. This concept is often observed in the context of transport economics, where an expansion in road capacity can lead to increased traffic […]

Definition of Induced Consumption Induced consumption refers to the portion of consumer spending that varies with income. In other words, it’s the spending that occurs when individuals adjust their expenditures in response to changes in their disposable income. This phenomenon is at the heart of Keynesian economics, which posits that […]