› CFA › CFA Level 1 › Question of the Week – Economics

Question of the Week – Economics

Add A Reply
Login
  • Author
    Posts
    • Avatar of AdaptPrepAdaptPrep
      Participant
        • Undecided
        22 Apr 2018 at 7:38 am
        Up
        0
        ::

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

        • Decrease
        • Increase
        • Remain unchanged
      • Avatar of AdaptPrepAdaptPrep
        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.

      • Author
        Posts
      Viewing 1 reply thread
      • You must be logged in to reply to this topic.