If all prices and income change by the same proportion:
A) the budget line shifts out.
B) the budget line shifts in.
C) the budget line rotates outward.
D) the budget line doesn't change.

Question

Quizplus · Accepted Answer

If all prices and income change by the same proportion, the budget line doesn't change. This is because the relative prices of goods and the individual's purchasing power remain the same, thus maintaining the slopes and intercepts of the budget line.

If All Prices and Income Change by the Same Proportion