The way K&B count objects for this kind of question, the first line creates two -- the quoted String literal, and the "new String()". Line two creates one. Line three creates two, one StringBuilder and one String because it actually compiles into something like
x = new StringBuilder(x).append(y).toString();
But note that each String contains a char[] member, and so does the StringBuilder, and so the "real" number might actually be as high as ten; or if you don't count the String literals (which actually get created when the class is loaded,) six.
I'm going to move this to
SCJP, because this kind of question is really only relevant there. The SCJP answer is 5.