An increase in money income with constant price results in

JAMB Economics 2023 179 views
Source: JAMB · 2023

An increase in money income with constant price results in

  1. Inward parallel shift in the budget line.
  2. Outward shift in the budget line. ✓
  3. Budget line remain constant
  4. Options A and C
Explanation

The budget line shows what a consumer can buy with a given income at given prices. If income rises and prices stay the same, the consumer can buy more of both goods.

The line shifts outward, parallel to the old one, because the slope depends only on the price ratio.

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