income elasticity of demand:The percentage change in quantity divided by the percentage change in income that
caused the change in demand.independent variable:A variable that determines the value of another variable.index numbers:The numbers used by economists to illustrate relative changes in prices, GDP, and other measures.indirect tax:A tax that can be shifted in part to a party other than the one on whom the tax is levied.individual choice:Decisions made by individuals who are acting separately from one another.inefficient:The underutilization of available resources.inelastic:An economic condition where the price of a good or service does not change as a result of supply or demand.inferior goods:Goods for which demand decreases as income increases (the inverse relationship between income and
demand).inflation:The economic condition in which the average level of prices rise.inflationary expectations:Being able to predict changes in the price level average.injection:Expenditures by firms, foreign sectors, and the government on goods and services produced within an economy.injunction:A court order mandating action or a halt to action.inputs:Factors of production (resources) used to make goods and services.inside lag:The amount of time it takes policymakers to agree on an economic remedy.interdependence:The relationship between different sectors of the economy, such as firms, households, and the
government.interest:The monetary cost for the use of money.interest rate:The percentage of total amount borrowed that is required when paying the principal back to the lender.inverse relationship:A type of relationship that describes the opposite nature between variables.investment:An increase in the amount of productive capital in an economy.invisible hand:The forces of supply and demand that guide prices in the economy based on individual choices.irregular economy:Economic activity that purposely ignores market system traits to avoid paying taxes on income
and transactions.J
job discrimination:The denial of employment to certain individuals because of their race, gender, religion, or other
characteristic.K
kinked demand curve:The demand curve that illustrates the behavior of competing oligopolistic firms; outlines a
firm’s expectation that its competitor will match its price.Glossary23 53999X Gloss.qxd 1/23/04 10:31 AM Page 251