This paper presents a representative-agent model with money holdings motivated by transaction costs, a fiscal authority that taxes and issues debt, no production, and a simple utility function. The model is solved analytically to illustrate the following key points: 1. **Monetary Policy and Price Level Determination**: A monetary policy that fixes the money stock can lead to indeterminacy or stochastic explosion of the price level, depending on the transactions technology. 2. **Fiscal Policy and Price Level Determination**: A monetary policy that fixes the nominal interest rate can uniquely determine the price level, even if it holds the interest rate constant regardless of inflation or money growth rates. 3. **Equilibrium Determinacy**: The existence and uniqueness of the equilibrium price level cannot be determined solely from monetary policy; fiscal policy plays an equally important role. 4. **Public Beliefs**: The determinacy of the price level under any policy depends on the public's beliefs about the policy authority's actions under conditions that are never observed in equilibrium. The model is a simplification of more complex models, but it captures the essential dynamics of price level determination and the interaction between monetary and fiscal policies. The paper builds on previous work by Eric Leeper, Michael Woodford, Aiyagari and Gertler, Sargent and Wallace, and Obstfeld, but improves upon them by providing a more transparent and comprehensive analysis within a single model.This paper presents a representative-agent model with money holdings motivated by transaction costs, a fiscal authority that taxes and issues debt, no production, and a simple utility function. The model is solved analytically to illustrate the following key points: 1. **Monetary Policy and Price Level Determination**: A monetary policy that fixes the money stock can lead to indeterminacy or stochastic explosion of the price level, depending on the transactions technology. 2. **Fiscal Policy and Price Level Determination**: A monetary policy that fixes the nominal interest rate can uniquely determine the price level, even if it holds the interest rate constant regardless of inflation or money growth rates. 3. **Equilibrium Determinacy**: The existence and uniqueness of the equilibrium price level cannot be determined solely from monetary policy; fiscal policy plays an equally important role. 4. **Public Beliefs**: The determinacy of the price level under any policy depends on the public's beliefs about the policy authority's actions under conditions that are never observed in equilibrium. The model is a simplification of more complex models, but it captures the essential dynamics of price level determination and the interaction between monetary and fiscal policies. The paper builds on previous work by Eric Leeper, Michael Woodford, Aiyagari and Gertler, Sargent and Wallace, and Obstfeld, but improves upon them by providing a more transparent and comprehensive analysis within a single model.