When the economy slides into a recession, budget lines
A) pivot inward.
B) pivot outward.
C) shift inward.
D) shift outward.

Question

Quizplus · Accepted Answer

When the economy slides into a recession, individuals and families often experience a decrease in income. This decrease in income reduces the amount of goods and services they can afford, effectively shifting their budget lines inward. This inward shift represents a decrease in purchasing power, not a change in the relative prices of goods (which would be represented by a pivot).

When the Economy Slides into a Recession, Budget Lines