During an economic expansion as consumer incomes rise, holding everything else constant,
A)the demand for most goods, except luxuries, will rise.
B)the demand for luxuries will rise while the demand for inferior goods will fall.
C)the demand for luxuries and inferior goods will rise.
D)the prices of luxuries will fall while the prices of inferior goods will rise.

Question

Quizplus · Accepted Answer

During an economic expansion, as consumer incomes rise, the demand for luxury goods typically increases because people have more disposable income. Conversely, the demand for inferior goods tends to decrease as consumers opt for higher-quality alternatives.

During an Economic Expansion as Consumer Incomes Rise, Holding Everything