If income decreases,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 parallel either leftward or rightward depending on whether the goods measured on the axes are normal or inferior.

Question

Quizplus · Accepted Answer

If income decreases, the budget line shifts leftward and parallel to the original budget line. This is because the total amount of money available for consumption has decreased, but the prices of goods and services have remained the same. Therefore, the budget line shifts inward, indicating a decrease in purchasing power.

If Income Decreases,the Budget Line