Search Council for Economic Education's full glossary for terms and definitions


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Identity Theft

Unauthorized, illegal use of a person's legal and financial identification (for example, his or her Social Security number or PIN).

Imperfect Competition

Any market structure in which firms are not price takers, but instead must seek the price and output levels that maximize their profits.

Implicit Cost

The monetary income a firm sacrifices when it employs a resource it owns to produce a product rather than supplying the resource in the market; equal to what the resource could have earned in the best-paying alternative employment.

Implicit Price Deflator

A price index that compares the prices of all the goods and services produced in the current-year gross domestic product (GDP) to the price levels that prevailed for those same goods and services in an earlier year or years. The implicit price deflator is used to adjust values of nominal or current-price GDP to obtain values for real GDP.


Goods and services bought from sellers in another nation.

Impulse Buying

Buying goods or services without comparison shopping or forethought about costs and benefits.


Any reward or benefit, such as money, advantage or good feeling, that motivates people to do something.


Payments earned by households for selling or renting their productive resources. May include salaries, wages, interest and dividends.

Income Effect

A portion of the effect on quantity demanded caused by a change in the price of a good or service. A fall in price, for example, increases a consumer's real income and leads to a change in the quantity demanded of that good or service.

Income Elasticity of Demand

The percentage change in the demand for a good or service divided by the percentage change in income.

Income fund

Income Inequality

The unequal distribution of an economy's total income among families, individuals or other designated groups.

Income Statement

The report of the revenue generated and expenses incurred by a firm in a designated time period, such as a month, a quarter or a year.

Income stock

Income Tax

Payments made by individuals and corporations to the federal government (and to some state and local governments) based on income received (both earned and unearned).

Index Fund

A mutual fund whose objective is to match the composite investment performance of a large group of stocks or bonds such as those represented by the Standard & Poor's 500 Composite Stock Index.

Indirect Relationship

The relationship that exists when the values of related variables move in the opposite direction. Also known as a negative relationship.

Individual Retirement Account (IRA)

An account in which an individual may set aside earned income in a tax-deferred savings plan for his or her retirement. There are two types of IRAs, traditional and Roth, each with its own qualifications and rules governing contributions and withdrawals.

Inferior Good

A commodity whose quantity demanded falls when the consumer's real income rises.


A rise in the general or average price level of all the goods and services produced in an economy. Can be caused by pressure from the demand side of the market (demand-pull inflation) or pressure from the supply side of the market (cost-push inflation).

Inflation Risk

The chance that the rate of inflation will exceed the rate of return on an investment.

Initial Public Offering (IPO)

A company's first sale of stock to the public. When a company "goes public," it sells blocks of stock shares to an investment firm that specializes in initial offerings of stocks and resells them to the public.


A new idea or method.

Insider trading

Institutional Investor

A financial intermediary, such as a pension fund or a mutual fund, that buys stock and other investments for clients.


A practice or arrangement whereby a company provides a guarantee of compensation for specified forms of loss, damage, injury or death. People obtain such guarantees by buying insurance policies, for which they pay premiums. The process allows for the spreading out of risk over a pool of insurance policyholders, with the expectation that only a few policholders will actually experience losses for which claims must be made. Types of insurance include automobile, health, renter's, homeowner's, disability and life.

Intensive Growth


A situation in which decisions made by one person affect decisions made by other people, or events in one part of the world or sector of the economy affect other parts of the world or other sectors of the economy.


Money paid regularly, at a particular rate, for the use of borrowed money.

Interest Rate

The price paid for using someone else's money, expressed as a percentage of the amount borrowed.

Interest Rate Risk

The chance that interest rates may change (upward) while the saver is "locked in" to a (lower) rate for a time deposit (a CD, for example) or a bond.

Intermediate Good

A good that is used in the production of final goods and services.

Intermediate-Term Goal

Something a person or organization plans to achieve from one to five years in the future.

Internal Revenue Service (IRS)

The government agency that collects federal income taxes.

International Monetary Fund (IMF)

An international organization established to supervise exchange-rate arrangements and to lend money to member countries having difficulties meeting their financial obligations to other countries.



An itemized list of goods held by a person or business. Also a quantity of goods held in stock.


The process of putting money someplace with the intention of making a financial gain. Investment possibilities include stocks, bonds, mutual funds, real estate, and other financial instruments or ventures.


The purchase of capital goods (including machinery, technology or new buildings) that are used to produce goods and services. In personal finance, the amount of money invested in stocks, bonds, mutual funds and other investment instruments.

Investment bank

Investment Return

The additional income earned from saving or investing money, often expressed as an annual percentage of the amount invested.

Investment, economic

Investment, financial

Investment, personal

Invisible Hand

A figure of speech representing the idea that firms and individuals making decisions in their own self-interest will at the same time create economic order and promote society's interests; coined by Adam Smith.