In the context of economic theory, the 'Law of Demand' may not hold in the case of:
A. All inferior goods
B. Normal goods
C. Necessary goods only
D. Giffen goods and Veblen goods
Answer: Option D
Solution (By JKSSB Mock Tests)
The law of demand does not hold for Giffen goods (where income effect outweighs substitution effect) and Veblen goods (where higher price increases demand due to prestige value).
Explanation:
The fiscal multiplier is the ratio of the change in real GDP to an exogenous change in the fiscal instrument (government purchases or taxes).
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