If all prices fall by 5 percent and money income remains constant, the new budget line will have

Name: If all prices fall by 5 percent and money income remains constant, the new budget line will have
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Question

Quizplus · Accepted Answer

If all prices fall by 5 percent and money income remains constant, the new budget line will have the same slope. This is because the slope of the budget line is determined by the ratio of the prices of the two goods, and this ratio will not change if all prices fall by the same percentage.

If All Prices Fall by 5 Percent and Money Income