When income increases, a budget constraint will:
A)shift inward, parallel to its initial position
B)shift outward, parallel to its initial position
C)pivot around the Y-axis
D)pivot around the X-axis

Question

Quizplus · Accepted Answer

When income increases, the budget constraint will shift outward parallel to its initial position. This is because the consumer now has more money to spend on the same goods and services, resulting in an increase in their ability to consume.

When Income Increases, a Budget Constraint Will