Figure10A-15Effect of a Change in Income on the Budget Line When relative prices are held constant, the budget line shifts parallel in response to changes in income. For example, if Ingrid’s income falls from $2400 to $1200, she is clearly worse off: her budget line shifts inward from BL1 to its new position at BL2. In contrast, if Ingrid’s income rises from $2400 to $3000, she is clearly better off: her budget line shifts outward from BL1 to its new position at BL3.