The diagram depicts a consumer’s starting budget line GH together with indifference curves IC1, IC2 and IC3 for goods R and S. The consumer’s initial equilibrium is at point X. The inflation rate is increasing more quickly than money incomes. If all real income is spent, what is the most probable new equilibrium for the consumer?
- Apoint A (movement shown on diagram)
- Bpoint B (movement shown on diagram)
- Cpoint C (movement shown on diagram)
- Dpoint D (movement shown on diagram)