1. Induced expenditure increases as real GDP increases.

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2. The slope of the consumption function line is less than the slope of the 45 line.

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3. The marginal propensity to consume equals total consumption expenditure divided by total disposable income.

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4. The consumption function shifts when wealth changes.

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5. Equilibrium expenditure occurs at the intersection of the aggregate expenditure curve and the 45 line.

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6. If aggregate planned expenditure is less than real GDP, unplanned inventories increase.

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7. If aggregate planned expenditure exceeds real GDP, inventories decrease and firms decrease production.

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8. If unplanned investment occurs, then the aggregate expenditure is not at its equilibrium level.

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9. If the multiplier is greater than 1.

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10. If the multiplier equals 4, then a $0.25 trillion increase in investment increases real GDP by $1.0 trillion.

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11. The smaller the marginal propensity to consume, the larger is the multiplier.

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12. A country that has a high marginal tax rate has a larger multiplier than a country with a low marginal tax rate, other things being the same.

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13. There is no relationship between equilibrium expenditure and the AD curve.

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