A Decrease in Income Causes Demand for a Normal Good

question 11

Multiple Choice

A decrease in income causes demand for a normal good to ________, and an increase in income causes demand for an inferior good to ________.

• A) decrease; decrease
• B) increase; increase
• C) decrease; increase
• D) increase; decrease

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Definitions:

Planning Budget

A budget prepared for a specific level of activity, often used for planning and coordinating actions.

Activity Variances

Differences between planned or budgeted amounts of costs or revenues and actual amounts incurred, attributable to specific activities.

Customers Served

The number or segment of clients or consumers to whom a business has provided goods or services.

Budgeting

The process of creating a plan to spend your money, outlining projected income versus expenses for a certain period.