Indifference curves and budget lines — practice question

When the price of a good decreases, the change in quantity demanded is caused by both an income effect and a substitution effect. Which of the following statements about these effects is correct?

• AFor inferior goods the income effect and the substitution effect work in the same direction.
• BFor inferior, but not Giffen, goods the income effect outweighs the substitution effect.
• CFor normal goods the income effect and substitution effect work in the same direction.
• DFor normal goods the income effect outweighs the substitution effect.