For normal goods A) the substitution effect of a price decrease will decrease the quantity of the good demanded while the income effect of a price decrease will increase the quantity of the good demanded. B) the substitution and income effects of a price decrease will both increase the quantity of the good demanded. C) the substitution and income effects of a price decrease will both decrease the quantity of the good demanded. D) the substitution effect of a price decrease will increase the quantity of the good demanded while the income effect of a price decrease will decrease the quantity of the good demanded.

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Normal and Inferior Goods

Understanding a normal good and an inferior good is important because it tells us what will happen to demand different products during booms and recessions.