Question

An economy currently has an inflationary gap. An increase in the money wage rate will​ ________...

An economy currently has an inflationary gap. An increase in the money wage rate will​ ________ the inflationary gap and​ ________ the price level.

A.

​increase; increase

B.

​decrease; increase

C.

​increase; decrease

D.

​decrease; decrease

Which of the following is NOT an asset of the Federal Reserve​ System?

A.

U.S. government securities

B.

loans to depository institutions

C.

reserves of depository institutions

D.

None of the above are correct because they are all assets of the Federal Reserve

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Answer #1

Q1
Answer
Option B.
decrease; increase
The increase in the nominal money wage decreases aggregate supply at each price level and shifts the AS curve to the left which increases price level and decreases the inflationary gap as the actual output decreases.
An inflationary gap is where the actual output is greater than potential output.
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Q2
ANswer
Option C.
reserves of depository institutions
Federal reserve system has Us government securities, and loans to depository institutions as assets and reserves from depositary institutions are liabilities.

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