If a person's income falls, his or her budget constraint moves
A)inward toward the origin, and its slope changes.
B)outward away from the origin, and its slope remains the same.
C)inward toward the origin, and its slope remains the same.
D)outward away from the origin, and its slope changes.

Question

Quizplus · Accepted Answer

When income falls, the budget constraint shifts inward, indicating less purchasing power, but the slope remains the same as it is determined by the relative prices of the goods.

If a Person's Income Falls, His or Her Budget Constraint