A leftward shift of a consumer's budget line to a position parallel with the original one could indicate that the
A)price of one product has decreased in relation to the other.
B)prices of both products have decreased in the same proportion.
C)consumer's money income has increased and the prices of both products have also increased but proportionately less.
D)consumer's money income has increased but the prices of both products have increased proportionately more.

Question

Quizplus · Accepted Answer

A leftward parallel shift of the budget line indicates a decrease in purchasing power, which occurs when income increases but prices increase proportionately more, reducing the quantity of goods that can be purchased.

A Leftward Shift of a Consumer's Budget Line to a Position