Answer the following statements true (T) or false (F)
1. If the marginal propensity to consume were four-fifths, the size of the multiplier would be 5.
2. The multiplier is the reciprocal of the marginal propensity to consume.
3. The multiplier is the relationship between the initial change in aggregate expenditure and the resulting change in income.
4. The higher the propensity to save, the larger the size of the multiplier.
5. If planned investment increases by $20 billion, other things remaining the same, planned saving eventually will increase by $20 billion, regardless of the size of the multiplier.
1. TRUE
2. FALSE
3. TRUE
4. FALSE
5. TRUE
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