True or False:
1. Unemployment compensation and public assistance payments act as automatic stabilizers, stimulating aggregate demand during recessions and reducing aggregate demand during booms.
2. Starting at a full-employment equilibrium, the gains in employment that result from expansionary fiscal policy will not be sustainable in the long run.
3. Starting at full employment, contractionary fiscal policy could cause a recession in the short run.
4. Starting at full employment, the long-run result of contractionary fiscal policy includes a lower price level and reduced real output.
5. The crowding-out effect will tend to reduce the magnitude of the effects of increases in government purchases.
6. The crowding-out effect implies that expansionary fiscal policy will tend to reduce private purchases of interest-sensitive goods.
7. The crowding-out effect does not occur with a tax change.
8. Critics of the crowding-out effect argue that an increase in government purchases (or a tax cut), particularly if the economy is in a severe recession, could improve consumer and business expectations and actually encourage private investment spending.