When a firm sells a product out of inventory, investment expenditures ___________ and consumption expenditures ________.

The correct interpretation when a firm sells a product out of inventory is that investment expenditures decrease and consumption expenditures increase. This occurs because when a firm sells goods that it has already produced and stored, it effectively reduces its inventory levels, which is considered a decrease in investment. This is because investment is measured in terms of how much firms produce and keep in inventory for future sale—when inventory is sold, it reflects a withdrawal from capital investment stocks.

On the other hand, the sale of these goods results in consumption expenditures increasing, as consumers are purchasing items they value. This increase in consumption reflects an actual transaction where consumers spend their money on goods, thus contributing positively to the consumption component of GDP. Therefore, it's understandable that when goods are drawn from inventory and sold, the overall investment decreases due to the reduction in stocks, while consumption rises due to the sales activity occurring.