For each of the following, state which are True, which are False and explain

the reason.

i. A change in disposable income shifts the consumption function.

ii. When real GDP increases, induced expenditure increases along the Aggregate expenditure curve.

iii. Planned aggregate expenditure can be different from the actual

aggregate expenditure.

iv. When aggregate planned expenditure exceeds real GDP, inventories rise

more than planned.

v. If the marginal propensity to consume is 0.8 and there are no income

taxes nor imports, the multiplier equals 5.

vi. In the long run an increase in investment expenditure by $1 billion

increases equilibrium GDP by more than $1 billion.