Question

An increase in income always leads to a rise in demand for goods. Defend or refute, giving reasons for the same.

Answer 1

The statement is not always true. An increase in income generally increases the demand for many goods because people have greater purchasing power and can afford more or better-quality products.

However, demand also depends on other factors such as tastes and preferences, prices of related goods, seasonality, and expectations. Moreover, when income increases, people may reduce their demand for cheaper or low-quality goods and shift to better alternatives.