In the graph above, as the consumer moves from indifference curve 1 to 3, his

Question

Quizplus · Accepted Answer

As the consumer moves from indifference curve 1 to 3, it indicates that the consumer is becoming more satisfied with the bundles of goods. This is only possible if the consumer's real income is increasing, meaning the purchasing power of his income is rising, and he can afford to buy more goods without affecting his purchasing power. Therefore, option B is correct as it states that the real income is rising and the nominal income is constant, which means the rise in the consumer's income is due to the decrease in the general price level.

In the Graph Above, as the Consumer Moves from Indifference