Economics · Consumer Behavior - Budget Line Shifts
A consumer faces a budget constraint for two goods, Good X and Good Y. The following sequence of economic events occurs one after another: 1. The consumer's overall money income increases. 2. The price of Good X rises. 3. The price of Good Y falls. 4. The consumer's money income decreases. Arrange the resulting geometric effects on the budget line in the correct chronological order corresponding to the events above: A. The budget line rotates inward around the Y-intercept, and the slope steepens. B. The entire budget line experiences a parallel inward shift, and both intercepts fall. C. The entire budget line experiences a parallel outward shift, and intercepts rise proportionally. D. The budget line rotates outward as the Y-intercept moves outward, and the slope steepens.
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1C, D, A, B
- 2A, C, D, B
- 3C, A, D, B✓
- 4B, C, A, D
Correct answer
C, A, D, B
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