A friend is currently earning income but does not expect to earn income in the future.When the interest rate rose, I observed him saving less.From this, I can conclude that current consumption is an inferior good for my friend.

Question

Quizplus · Accepted Answer

The observation that your friend saves less when the interest rate rises does not necessarily indicate that current consumption is an inferior good. It suggests that your friend might be more inclined to consume now rather than save for future consumption, which could be due to various reasons, including preferences for present consumption over future consumption, but it does not directly relate to the concept of an inferior good. An inferior good is one whose demand decreases as income increases, which is not directly related to the scenario described.

A Friend Is Currently Earning Income but Does Not Expect