Which of the following is an example of how money circulates as a result of an increase in consumption expenditures?
◯ Consumers compete with the government by increasing their expenditures, causing businesses to increase their investments to satisfy the increased demand.
◯ Consumption expenditures increase inflation, which reduces real incomes; consumer expenditures and investment decline, which reduces aggregate spending.
◯ Households and businesses receive income from consumption expenditures; they spend a portion of this new income; these expenditures, in turn, generate income for other businesses and households, which in turn spend a portion of the new income, and so on.
◯ Consumption expenditures stimulate investment in new plants and equipment to produce goods and services for the government, which provides fewer jobs and decreases incomes.