An Increase in a Consumer's Income

question 16

Multiple Choice

An increase in a consumer's income:

• A) shifts the consumer's indifference curves out.
• B) causes the consumer to buy more of every good.
• C) shifts the consumer's budget constraint out.
• D) causes the consumer to increase purchases of inferior goods.
• E) causes the consumer to buy more inferior goods.

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Definitions:

Creditor

An individual or institution that lends money or extends credit to another party.

Accounting Assumption

Fundamental beliefs or principles that guide the preparation of financial statements, such as going concern, accrual basis, and consistency.

Integrity

The quality of being honest and having strong moral principles; moral uprightness.

Going Concern

An accounting principle that assumes a company will continue to operate and fulfill its obligations in the foreseeable future.