ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -It is a true statement. This option is correct because an increase in income causes an increase in demand for normal goods. It means the quantity demanded rises with the increase in income of a consumer.

Detailed explanation-2: -The income effect describes how an increase in income can change the quantity of goods that consumers will demand. For so-called normal goods, as income rises so does the demand for them (and vice-versa). This is reflected in microeconomics via an upward shift in the downward-sloping demand curve.

Detailed explanation-3: -Normal goods are a type of goods whose demand shows a direct relationship with a consumer’s income. It means that the demand for normal goods increases with an increase in the consumer’s income or expansion of the economy (which generally will increase the income of the population).

Detailed explanation-4: -For most goods, called normal goods, if consumer incomes increase, demand will increase and vice versa. So if incomes increase, the demand curve for restaurant meals, and cars, and boats, will shift to the right. At the same prices people will buy more.

Detailed explanation-5: -Answer and Explanation: For a normal good, when income increases, the demand for a good increases and when income drops, demand drops.