a change in income and budget constraint

A change in income would affect a person’s budget constraint because the budget constraint is determined by the amount of money that is available to be spent. If a person’s income increases, then the budget constraint would become more elastic, meaning that the person would be able to spend more money because the resources have increased. On the other hand, if a person’s income decreases, then the budget constraint would become more inelastic, meaning that the person would have to be more mindful and restrictive with their budget because the amount of money available to spend has decreased.