"To reduce fiscal deficits, the government may adopt either contractionary fiscal policy (e.g. increase taxes and/or decrease fiscal spending) or expansionary monetary policy (e.g. finance the deficits by printing money)."
Refer to a situation of an upward-sloping short run aggregate supply curve. Which of the following are the advantages of using expansionary monetary policy over contractionary fiscal policy to reduce fiscal deficits?
(1) The employment level will be higher.
(2) The purchasing power of money will be higher.
(3) The real output level will be higher.
A. (1) and (2) only
B. (1) and (3) only
C. (2) and (3) only
D. (1), (2) and (3)