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Author Question: Explain the difference between a normal good and an inferior good. What will be an ideal ... (Read 34 times)

MirandaLo

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on: Jun 29, 2018
Explain the difference between a normal good and an inferior good.
 
  What will be an ideal response?

Question 2

Does the quantity theory correctly predict the effects of money growth on inflation?
 
  What will be an ideal response?


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mohan

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Reply #1 on: Jun 29, 2018
Answer to Question 1

A normal good is something for which the demand increases when income rises and the demand decreases when income falls. An inferior good is something for which the demand decreases when income rises and the demand increases when income falls.

Answer to Question 2

The long-run historical and international evidence on the relationship between money growth and the inflation rate support the quantity theory. The data suggest a marked tendency for nations with high money growth rates to have high inflation rates.


MirandaLo

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Reply 2 on: Jun 29, 2018
Great answer, keep it coming :)

sailorcrescent

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Reply 3 on: Yesterday
YES! Correct, THANKS for helping me on my review

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