When Income Increases, the Demand Curve for X Shifts Rightward

question 168

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

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Definitions:

Permanent Scars

Long-term damage or impact left on the economy or individual sectors by significant events, such as financial crises or pandemics.

Costs of Inflation

The economic consequences of inflation, including decreased currency value and increased uncertainty in investment.

Aggregate Demand

The total demand for all goods and services within an economy, including consumption, investment, government spending, and net exports.

Aggregate Supply

The total supply of goods and services produced within an economy at a given overall price level and in a given time period.