When overall income in the economy decreases, what happens to the price and quantity of goods that are considered inferior goods?

When overall income in the economy decreases, people tend to purchase more inferior goods. Inferior goods are those for which demand increases as consumer income falls, as individuals shift their spending from more expensive substitutes to these lower-cost options.

As demand for inferior goods rises due to the decrease in income, the increased demand will typically exert upward pressure on their prices. In response to this higher demand, suppliers may also increase the quantity of these goods available in the market to meet the new consumer needs. Therefore, both the price and quantity of inferior goods increase as overall income declines.

This characteristic of inferior goods highlights their unique relationship with income levels, contrasting with normal goods, for which demand would decrease when overall income falls.