4. Which of the following statements is (are) correct? (x) If households view a tax cut as being temporary, the tax cut has more of an effect on aggregate demand than if households view it as permanent. (y) A decrease in taxes is an example of an expansionary fiscal policy and that policy will probably cause the aggregate demand curve to shift to the right. (z) An increase in government purchases coupled with a decrease in taxes is an expansionary fiscal policy that will increase the budget deficit. A. (x), (y) and (z) B. (x) and (y) only C. (x) and (z) only D. (y) and (z) only. E. (x) only

5. which of the following statements is (are) correct? (x) The multiplier effect is the multiplied impact on aggregate demand of a given increase in government purchases of goods and services. (y) The marginal propensity to consume (MPC) is defined as the fraction of extra income that a household consumes rather than saves and the larger the MPC the larger the multiplier effect. (z) According to the multiplier effect, an increase in government purchases causes interest rates to increase which increases investment spending. A. (x), (y) and (z) B. (x) and (y) only C. (x) and (z) only D. (y) and (z) only. E. (y) only

Which of the following statements is (are) correct? (x) According to the textbook, an increase in government spending on goods to build or repair transportation infrastructure and education facilities shifts the aggregate demand curve to the right and, in the long run, shifts the aggregate supply curve to the right. (y) According to the crowding-out effect, an increase in government purchases causes interest rates to rise and the interest rate increase causes an increase in investment spending. (z) The multiplier effect amplifies the effects of an increase in government expenditures, while the crowding-out effect diminishes the effects. A. (x), (y) and (z) B. (x) and (y) only C. (x) and (z) only D. (y) and (z) only. E. (z) only