Question on: JAMB Economics - 2023
An increase in money income with constant price results in
A
Outward shift in the budget line
B
Inward parallel shift in the budget line
C
Budget line remain constant
D
None of the above.
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Correct Option: A
When an individual's money income increases while prices remain constant, they have the ability to purchase more goods and services. This increase in purchasing power is represented by an outward shift of the budget line on a graph, indicating that more combinations of goods and services are now affordable.
So, an increase in money income with constant prices results in an outward shift in the budget line.
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