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Thomas consumes coffee ( C) and doughnuts ( D). His budget line was described by the equation D = 20 - 2 C. At a later time, his budget line could be described by the equation D = 10 - C. The change between the earlier budget line and the later could be explained by the fact that __________________.

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lucariel92

Answer:

Thomas' real income now is half that it was  (nominal income decreased by half or prices doubled)

Step-by-step explanation:

If you graph both cases you will see that the shift is parallel between one case and the other.

Changes in relative prices (this is, if only one of the goods change prices), would cause a rotation in the budget line