If government spending increases, and total expenditures, investments, and the trade balance remains constant, consumption most likely will: Decrease Increase Remain unchanged

This question is an application of the total expenditures formula: Total Expenditure = Consumption + Investments + Government Spending + Net Exports Solving for consumption, we get: Consumption = Total Expenditure - Investments - Government Spending - Net Exports If all the other items remain equal and government spending increases, consumption will decrease.

Question Of The Week - Economics (5) - CFA Level 1

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This topic has 1 reply, 1 voice, and was last updated Apr-188:24 am by AdaptPrep.

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- AdaptPrep
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  22 Apr 2018 at 7:38 am
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  ::
  If government spending increases, and total expenditures, investments, and the trade balance remains constant, consumption most likely will:
  - Decrease
  - Increase
  - Remain unchanged
- AdaptPrep
  Participant
  - Undecided
  25 Apr 2018 at 8:24 am
  Up
  1
  ::
  This question is an application of the total expenditures
  formula:
  
  Total Expenditure = Consumption + Investments + Government
  Spending + Net Exports
  
  Solving for consumption, we get:
  
  Consumption = Total Expenditure – Investments – Government
  Spending – Net Exports
  
  If all the other items remain equal and government spending
  increases, consumption will decrease.
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