Explanation:

- Option 1: Demand decreases with increase in the income

- This would apply to inferior goods, not normal goods. As income rises, people buy less of inferior goods.

- Option 2: Demand increases with increase in the income

- This is typical for normal goods. As people earn more, they can and often do spend more on these goods.

- Correct Answer

- Option 3: Demand decreases with decrease in the income

- For normal goods, reduced income means less spending ability, so demand drops.

- Option 4: Demand increases with decrease in the income

- This again characterizes inferior goods, as people switch to cheaper alternatives when income falls.

Your answer is right.