In what direction will an increase in income cause a shift in the budget constraint
A)outward
B)toward the good most consumed
C)toward the good least consumed
D)inward

Question

Quizplus · Accepted Answer

An increase in income will cause a shift in the budget constraint outward. This means that the individual will be able to buy more of both goods at any given price level. This shift occurs because the individual now has more money to spend, and can afford to consume more of both goods while still being able to afford their original consumption bundle.

In What Direction Will an Increase in Income Cause a Shift