Question

If a household's income rises by 30%, its budget constraint will A) shift out parallel to the old one. B) pivot at the Y-intercept. C) shift in parallel to the old one. D) be unaffected

Answer 1

A

Step-by-step explanation:

A budget constraint is a graph that shows all the combination of goods a consumer can consume given current prices and income of the consumer.

If income increases, the budget constraint will shift out parallel to the old

If income decreases, budget constraint will shift in parallel to the old one.