If a household's income is cut in half, 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.

Question

If a household's income is cut in half, its budget constraint willA)  shift out parallel to the old one.B)  pivot at the Y-intercept.C)  shift in parallel to the old one.D)  be unaffected.

Michaela Gulachek · Accepted Answer

Final Answer : C, Explanation :  When a household's income is cut in half, its budget constraint shifts inward parallel to the old one because the household can now afford less of both goods, assuming prices remain constant.

If a household's income is cut in half, 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.

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