Explanation:

The CPU uses cache memory to store frequently used instructions and data for faster access. Level 1 cache is the smallest and fastest cache memory located on the CPU. Increasing the level 1 cache size can greatly improve the performance of the system due to the following reasons:

1. Faster Access Time: Level 1 cache has the fastest access time compared to other memory types. Increasing its size increases the amount of frequently used data and instructions that can be stored, resulting in faster access times, and hence improved system performance.

2. Reduced Memory Access Time: Fetching data from main memory is a time-consuming process that can slow down the overall system performance. When the CPU has a larger level 1 cache, it can store more frequently used data, thereby reducing the number of times it needs to access main memory, and hence improving the system performance.

3. Reduced Cache Misses: Cache misses occur when the CPU needs to access data that is not present in the cache memory. This results in slower system performance as the CPU has to fetch the data from main memory. Increasing the size of the level 1 cache reduces the number of cache misses, as more data can be stored in the cache, resulting in improved system performance.

Overall, increasing the level 1 cache size can greatly improve the performance of the system by reducing the memory access time, reducing cache misses, and providing faster access times. Therefore, the given statement is true.