True or False?
The statement is strictly true only if we also specify that the good whose price has changed is not inferior---that is that the quantity demanded of it increases when real income increases. As the price of the good falls holding real income constant---that is, keeping all individuals consuming it on their original indifference curves---more of that good will be bought by everyone. Of course, since it is nominal income and not real income that will be held constant as the price of the good falls, individuals' real incomes will increase. If the good is a normal good, the quantity of it purchased will also increase as a result of the income effect, ensuring that the demand curve for the commodity will be negatively sloped. If the good happens to be inferior, the demand for it will decline as a result of the income effect, but only in the case of extreme inferiority could this income effect offset the substitution effect sufficiently to create a demand curve that is positively sloped.