If money income doubles and the prices of all goods triples,then the:
A) budget line remains unchanged.
B) consumer is worse off due to inflation.
C) consumer will buy more of normal goods.
D) budget line will shift out.

Question

Quizplus · Accepted Answer

When money income doubles but the prices of all goods triple, the real purchasing power of the consumer decreases, making the consumer worse off due to inflation. This is because the increase in income does not compensate for the higher increase in prices.

If Money Income Doubles and the Prices of All Goods