Step 1 (Judge by the magnetic response): Classify a material by watching what a magnet does to it and what happens to field lines inside it.
Step 2 (Diamagnetic): A magnet pushes it away (weak repulsion). Field lines are pushed out of the material, so susceptibility \(\chi\) is small and negative and \(\mu_r\) is a shade below 1. This behaviour arises because the material has no net atomic magnetic moment; the field only induces a tiny opposing moment. Everyday examples are bismuth, copper and water.
Step 3 (Paramagnetic): A magnet pulls it in (weak attraction). Field lines crowd slightly into the material, so \(\chi\) is small and positive and \(\mu_r\) is a shade above 1. Here each atom already carries a permanent moment that lines up partly with the field, though thermal motion keeps the alignment weak. Examples are aluminium, platinum and oxygen.
\[\boxed{\text{Dia: repelled, }\chi<0;\quad \text{Para: attracted, }\chi>0}\]