Suppose the Consumer's Income Increases While the Prices of the Goods

question 181

Multiple Choice

Suppose the consumer's income increases while the prices of the goods remain constant.Then the

• A)budget constraint shifts inward parallel to the original budget constraint.
• B)budget constraint shifts outward parallel to the original budget constraint.
• C)indifference curves shift outward away from the origin.
• D)indifference curves become flatter.

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Definitions:

Marginal Tax Rate

The rate at which the last dollar of taxpayers' income is taxed, indicating how much tax will be paid on an additional dollar of income.

Tax Liability

The total amount of tax owed to the government by an individual, corporation, or other entity for a given period.

Taxable Income

Taxable income is the amount of income subject to tax, after all deductions and exemptions have been accounted for.

Average Tax Rate

the proportion of total income that is paid in taxes, calculated by dividing the total amount of taxes paid by the total income.