4. Evaluate the following statements as to whether they are true or false:

a. The multiplier means that changes in wealth have a larger effect on consumption spending than changes in consumer confidence.

b. Both an increase in government spending (G)

and an increase in personal taxes (TP) will shift the aggregate expenditure function in the same direction.

c. The national income accounts show that real income (Y) always equals real expenditure

(E), given the definition of the circular flow of economic activity. Thus, the economy must always be in equilibrium because that is also where Y = E.