If money income is reduced by half,and the prices of all goods consumed by the household are reduced by half,the household's budget line will
A)not change.
B)shift inward.
C)shift outward.
D)become steeper.
E)become flatter.

Question

Quizplus · Accepted Answer

If the money income is reduced by half, but the prices of goods consumed by the household are also reduced by half, the relative prices of goods and the purchasing power of the household remain the same. Therefore, the budget line will not change and will have the same slope as before.

If Money Income Is Reduced by Half,and the Prices of All