If investment increases ,which of the following happens?
i. aggregate expenditure increases
ii. real GDP increases
iii. consumption expenditure decreases
A) i and ii
B) i only
C) ii only
D) ii and iii
E) i, ii, and iii

Question

Quizplus · Accepted Answer

When investment increases, it directly increases the aggregate expenditure due to the expenditure approach of GDP. Moreover, investment also contributes to the increase in real GDP as it is one of the components of GDP. However, there is no direct relationship between investment and consumption expenditure. Therefore, the correct options are i and ii only.

If Investment Increases ,Which of the Following Happens