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      Question

      Which of the following correctly links disguised

      unemployment with the concept of inferior goods? 
      A Disguised unemployment increases income, reducing demand for inferior goods Correct Answer Incorrect Answer
      B Disguised unemployment keeps incomes low, sustaining demand for inferior goods Correct Answer Incorrect Answer
      C Disguised unemployment has no effect on goods demand Correct Answer Incorrect Answer
      D Disguised unemployment only affects Veblen goods Correct Answer Incorrect Answer
      E Disguised unemployment increases demand for luxury goods Correct Answer Incorrect Answer

      Solution

      Disguised unemployment means low productivity and low income. Poor households continue to consume inferior goods (cheap staples) because they cannot afford better ones.

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