Macroeconomics

Intertemporal budget constraint:

The budget

constraint applying to expenditure and income in

more than one period of time. (Cf. budget  constraint.)

Inventory investment:

The change in the quantity

of goods that firms hold in storage, including materi-

als and supplies, work in process, and finished goods.

Investment:

Goods purchased by individuals and

firms to add to their stock of capital.

Investment tax credit:

A provision of the corpo-

rate income tax that reduces a firm’s tax when it

buys new capital goods.

IS curve:

The negative relationship between the

interest rate and the level of income that arises in 

the market for goods and services. (Cf. IS–LM

model, LM curve.)

IS –LM model:

A model of aggregate demand that

shows what determines aggregate income for a given

price level by analyzing the interaction between the

goods market and the money market. (Cf. IS curve,

LM curve.)