goods whose demand vary directly with money income are called?

Step 1: Analyze the question The question asks about goods whose demand changes in the same direction as money income. "Vary directly" means that when income rises, demand rises, and when income falls, demand falls.

Step 2: Explain the concept Goods are classified by how demand responds to changes in income (this is called income elasticity of demand):

• Normal goods: demand rises as income rises (positive income elasticity). Examples: rice, clothing, phones.
• Inferior goods: demand falls as income rises (negative income elasticity). Examples: garri for some households, second-hand clothes ("okrika").
• Complementary goods: goods used together, so demand for one depends on the price of the other. Examples: car and petrol, bread and butter.
• Substitutes: goods that can replace each other, so demand for one depends on the price of the other. Examples: Peak milk and Cowbell, or Coke and Pepsi.

Step 3: Work through the options

• A. Inferior goods: demand varies inversely with income, so this is wrong.
• B. Complementary goods: this concerns the relationship between two goods' prices, not income, so this is wrong.
• C. Substitutes: the same reasoning applies, so this is wrong.
• D. Normal goods: demand varies directly with income, so this is correct.

Step 4: Answer The correct answer is D. normal goods.

Exam tip: Link the words to the direction of change:

• Directly related to income → Normal
• Inversely related to income → Inferior
• Related to another good's price → Substitute or Complement

Whenever you see "income," think normal or inferior. When you see "price of another good," think substitute or complement.