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:

Unlevered Return

The return on an investment that has not been adjusted for the effects of leverage or borrowing.

Total Firm Value

The overall value of a company, including both equity (market capitalization) and debt levels, used in business valuation and financial analysis.

Unlever

The process of reducing the level of debt in a company's capital structure, either by paying off debt with equity or with profits generated from operations.

Lend Out

The act of providing a loan or capital to another party with the expectation of being repaid, often with interest.