For normal goods, as income increases demand increases. For inferior goods, as income decreases demand increases.

   The graph to the right illustrates the effect of an increase in income for a normal good, or a decrease in income for an inferior good. As income rises, consumers can afford more normal goods and therefore, demand shifts out; as income falls consumers feel worse off and shift to buying more inferior goods, again causing demand to shift out.

   Remember, the effect of a change in income on demand depends on whether the good is normal or inferior.

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