An increase in a consumer's budget
A) shifts the budget line outward and does not change its slope.
B) shifts the budget line inward and does not change its slope.
C) rotates the budget line outward around the point where it intersects the x-axis.
D) rotates the budget line inward around the point where it intersects the x-axis.
E) rotates the budget line outward around the point where it intersects the y-axis.

Question

Quizplus · Accepted Answer

An increase in a consumer's budget causes the budget line to shift outward, as the consumer can now afford to purchase more of both goods. This shift occurs without changing the slope of the budget line, as the relative prices of the two goods remain the same.

An Increase in a Consumer's Budget