An Increase in an Individual's Income Without Changing Relative Prices

question 1

Multiple Choice

An increase in an individual's income without changing relative prices will

• A)rotate the budget constraint about the X-axis.
• B)shift the indifference curves outward.
• C)shift the budget constraint outward in a parallel way.
• D)rotate the budget constraint about the Y axis.

Learn the method of discounting future income to present value.

Understand the relationship between interest rates and the present value of future payments.

Understand the concepts of the inflationary premium and real versus nominal interest rates.

Understand the effects of real interest rate changes on investment and consumption decisions.

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Definitions:

Inductive Arguments

Arguments that reason from specific instances to general principles, often used to form hypotheses or theories.

Necessary Proof

Evidence or argument required to establish a fact or the truth of a statement.

Conclusion Indicator

Words or phrases used within an argument to signal that a conclusion is being drawn, such as "therefore" or "thus."

Because

A conjunction used to introduce a reason or explanation for something.