Archives: Terms

Definition of Investment Multiplier The investment multiplier is a concept in macroeconomics that measures the effect of an initial investment on aggregate demand and economic output. It represents the change in national income or output that results from a change in investment spending. Example To understand the investment multiplier, let’s […]

Definition of Intertemporal Choice Intertemporal choice refers to the decision-making process when individuals or societies have to choose between options that offer different benefits or costs at different points in time. It involves evaluating the trade-offs between present and future outcomes and making decisions that maximize overall well-being over time. […]

Definition of International Labor Organization (ILO) The International Labor Organization (ILO) is a specialized agency of the United Nations that focuses on promoting social justice and improving labor conditions worldwide. It was established in 1919 and is based in Geneva, Switzerland. The ILO sets international labor standards, develops policies and […]

Definition of Intermediate Good An intermediate good, also known as a producer good or a semi-finished good, is a commodity that is used as an input in the production of other goods or services. It is not a final product that is sold directly to consumers, but rather a component […]

Definition of Input-Output Analysis Input-Output Analysis is an economic tool that measures the interdependence between different sectors of an economy. It provides a detailed understanding of the flow of goods, services, and money within an economy by tracking how inputs from one sector are used as outputs in other sectors. […]

Definition of Inflationary Gap An inflationary gap occurs when the level of aggregate demand in an economy exceeds its potential output, leading to upward pressure on prices. In simple terms, it is a situation where there is too much demand chasing too few goods and services, resulting in inflationary pressures. […]

Definition of Inferior Goods Inferior goods are goods for which demand decreases as consumer income increases. In other words, when people have more money, they tend to buy less of these goods, and when they have less money, they buy more of them. Inferior goods are usually considered to be […]

Definition of Infant-Industry Theory Infant-industry theory is an economic theory that suggests that developing countries should protect and nurture their fledgling industries until they become competitive enough to compete in the international market. This theory assumes that these industries need temporary protection from foreign competition to grow and eventually become […]

Definition of Industry Life Cycle The industry life cycle is a model that describes the stages an industry goes through from its introduction to its decline. Similar to the product life cycle, the industry life cycle is characterized by different levels of growth, maturity, and decline. Understanding the industry life […]

Definition of Industry An industry refers to a group of companies or businesses that are involved in the production or manufacturing of similar goods or the provision of similar services. It encompasses all the organizations engaged in a particular line of business activity. Examples of industries include the automobile industry, […]