When Income Increases, the Demand Curve for X Shifts Rightward

question 399

Multiple Choice

When income increases, the demand curve for X shifts rightward and the demand curve for Y
Shifts leftward. These shifts mean that

• A) X is an inferior good and Y is a normal good.
• B) X and Y both normal goods.
• C) X and Y are complements.
• D) X is a normal good and Y is an inferior good.

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Definitions:

Economic Theories

Systems of ideas and principles that explain the functioning of economies and guide the analysis and formulation of economic policies.

Circular-Flow Diagram

An illustrative depiction of the economy demonstrating the circulation of currency among markets, households, and companies.

Firms

Firms are business organizations engaged in industrial, commercial, or professional activities, aiming to generate profits.

Circular Flow Model

An economic model that depicts the continuous flow of money, goods, services, and factors of production between households and businesses in an economy.