decrease in expenditure bring a decrease in income. why?
Income as in GDP?? Y=C+I+G+NX, Y=income of the nation, C=Consumption. From this relation it should be clear that a decrease in consumption leads to a decrease in income, holding all else constant.
Decrease in expenditure shifts the demand curve to left. The intersection point of demand and supply curves changes. Real GDP decreases, and the price level drops. Firms have to sell at a lower price, their income drops.