Fiscal policy affects the money market through its effect over: Money supply and

Question

Fiscal policy affects the money market through its effect over: Money supply and income. Income and money demand. Money supply and money demand. None of the above. In the short-run, a decrease in net taxes will cause a(n) increase in price level and an increase in output increase in price level and an reduction in output reduction in price level and an increase in output reduction in price level and an reduction in output no change in price level and an increase in output The short-run aggregate supply curve shifts to the right when wage rate increases population decreases government increases spending input prices decreases

Explanation / Answer

1, None of the above because fiscal policy regulated the money market through goverment spending and taxation , however it is the monetary policy which will regulate the money supply and demand

2.option d is the right answer because the reduction in price level and reduction in output will be there in short run as the net taxes are reduced which causes increase in disposable income of the person.

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