When your income increases,
A) your budget line shifts leftward and its slope does not change.
B) the slope of your budget line decreases.
C) your budget line shifts rightward and its slope does not change.
D) the slope of your budget line increases.

Question

Quizplus · Accepted Answer

An increase in income shifts the budget line rightward because you can afford more of both goods, but it does not change the slope since the relative prices of the goods remain the same.

When Your Income Increases