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

When a firm sells a product out of inventory, it is essentially drawing on stock that it previously produced and stored. This transaction reflects a reduction in the inventory, which is classified as an investment expenditure. Therefore, when the firm sells from its inventory, the investment expenditures decrease because the stock of unsold goods is being utilized rather than newly produced.

In this scenario, consumption expenditures will increase because consumers are actively purchasing the goods that the firm sells. Consumption expenditures represent the spending by households on goods and services. Thus, when a product is sold from inventory, it directly results in an increase in consumer spending on that product.

This understanding aligns with the broader economic principles that relate inventory changes to investment and consumption dynamics. When inventories fall due to sales, it indicates that goods are being utilized rather than being produced currently, leading to a decrease in investment expenditures and an increase in consumption expenditures.