36) The permanent income hypothesis implies that the effect of a temporary tax cut on economic activity

a)can be greater than or smaller than the effect of a permanent tax cut, depending on how the tax cut affects the government.

b)is smaller than the effect of a permanent tax cut.

c)is greater than the effect of a permanent tax cut.

d)is the same as the effect of a permanent tax cut.

33)Which of the following statements about fiscal policy is TRUE?

a)Government can shift the aggregate demand curve inward by increasing spending.

b)Government can shift the aggregate demand curve outward by reducing spending.

c)Real Gross Domestic Product (GDP) can be increased above its long-run equilibrium only in the short run.

d)Real Gross Domestic Product (GDP) can never be increased above its long-run equilibrium, even for a brief period of time.