When an Individual's Income Increases, the Budget Constraint

question 139

Multiple Choice

When an individual's income increases, the budget constraint:

• A)shifts straight out, maintaining the same slope.
• B)shifts straight in, maintaining the same slope.
• C)rotates out and becomes flatter.
• D)rotates in and becomes steeper.

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Definitions:

Lender of Last Resort

An institution, usually a country's central bank, that offers loans to banks or other eligible institutions that are experiencing financial difficulty or are considered highly risky.

Less-Developed Nations

Countries with low levels of industrialization, low living standards, and low Human Development Index (HDI) scores.

Industrially Advanced Countries

Nations that have highly developed industries and infrastructure, often exhibiting high standards of living, stable economies, and technological advancements.

Developing Countries

Nations with a lower level of industrialization, income, and standard of living compared to developed countries.