If income increases,the budget line
A)becomes steeper.
B)becomes flatter.
C)shifts leftward and parallel to the original budget line.
D)shifts rightward and parallel to the original budget line.
E)shifts parallels either leftward or rightward depending on whether the goods measured on the axes are normal or inferior.

Question

Quizplus · Accepted Answer

When income increases, the budget line shifts rightward and parallel to the original budget line. This is because with more income, more goods and services can be purchased at any given price level. Therefore, the budget constraint is relaxed and the consumer can purchase more of both goods without having to sacrifice one for the other.

If Income Increases,the Budget Line