If the overall demand in the economy rises, how is the market for inferior goods likely to be affected?

When overall demand in the economy rises, it can lead to an increase in the quantity demanded for inferior goods. Inferior goods are those for which demand tends to decrease as consumer incomes rise because people switch to more expensive substitutes. However, it's crucial to note that when overall demand rises in the economy—often due to a shift in preferences or circumstances—consumers may still purchase these inferior goods as lower-cost options, especially if they are facing constraints or if the price of the preferred good rises unexpectedly.

In this scenario, the price of inferior goods can be ambiguous because the increased demand might lead to higher prices if the supply does not adequately adjust. However, it may also lead to an increase in quantity sold based on the higher overall demand in the market, as consumers may buy more of the inferior good during economic changes, especially if they still appeal due to limited budgets or preferences.

Thus, while the price response is uncertain—the economic situation can determine whether prices rise or remain stable—the quantity demanded for inferior goods is likely to increase as consumers may lean towards these lower-cost options. This reflects the nature of inferior goods, where greater demand can still coexist with varying price outcomes.