When Income Decreases, All Else Held Constant, Which of the Following

question 61

Multiple Choice

When income decreases, all else held constant, which of the following occurs?

• A)Demand for an inferior good decreases.
• B)The slope of the highest attainable indifference curve changes.
• C)The budget line shifts out from the origin.
• D)Total utility decreases.
• E)Total utility increases.

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Definitions:

Interest Rate

The percentage of a sum of money charged for its use, typically expressed on an annual basis, serving as a key parameter in financial transactions.

Present Value

The present value of a future amount of money or series of cash flows, considering a particular return rate.

Interest Rate

The percentage of the principal charged by a lender for the use of its money or the rate at which interest is paid by a borrower for the use of money.

Consumes

The action of using up a good or service, typically resulting in a decrease in available quantity.