what are inferior goods 
inferior goods are goods for which demand declines as consumers real incomes rise or rises as incomes fall consumers with more money may opt to buy more expensive substitutes instead of what they could afford only when incomes were lower the bottom linethe income effect identifies the change in consumers demand for goods and services based on their incomes in general as one s income rises they will begin to demand more goods similarly a decrease in income results in lower demand the marginal propensity to spend and the marginal propensity to save are looked at when determining the influences of the income effect the substitution effect also plays a role in how consumers spend their income in times of rising or declining income for normal goods the income effect works as predicted for inferior goods it works in the opposite direction 