In general, a decrease in consumer income will lead to a decrease in demand for normal goods. This is because normal goods are defined as goods for which demand increases as consumers' incomes rise and decreases as incomes fall. When consumers have less income, their purchasing power declines, so they buy less of these goods
. To summarize:
- Normal goods have a positive income elasticity of demand.
- When consumer income decreases, the demand curve for normal goods shifts leftward, indicating lower demand at each price level.
- Consumers tend to reduce consumption of normal goods when their income falls, often switching to cheaper substitutes or buying less overall
Thus, a fall in consumer income results in a reduction in demand for normal goods.