If all prices are doubled and money income is left the same, the budget set does not change because relative prices do not change.

Name: If all prices are doubled and money income is left the same, the budget set does not change because relative prices do not change.
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Question

Quizplus · Accepted Answer

Doubling all prices while keeping money income the same reduces the quantity of goods and services that can be purchased, effectively shrinking the budget set, even though relative prices remain unchanged.

If All Prices Are Doubled and Money Income Is Left