ANSWERS TO MATCHING I
A. the most effective of these is sometimes said 
to be the graduated corporate income tax; 
they function to smooth out the vacillations 
of the business cycle.
B. a line bowed out from a 45 line indicates 
the distribution of wealth in an economy.
C.  the nominal interest rate adjusted 
for the inflation rate.
D. the difference between the value 
of goods and services imported and those exported.
E. the impact of the Fed's statements regarding 
anticipated economic activity with the inference 
of what its policies in response to them are expected to be.
F. the annual shortfall of revenue in relation to spending
of the federal budget.
G. an error of statistical validity based 
on projecting data of a sample to a larger universe.
H. purports to demonstrate that the government's deficit 
would be balanced except for an unemployment
rate above 5 % -- it is said to be $ 30 billion higher 
for each additional percent of unemployment.
I. the Fed has a great influence on this; 
it is measured by a series of data, 
increasing in size but of decreasing liquidity, 
M1, M2, M3, and L.			
J. MV=PQ
K. based on the assumption of a rational 
economic player, it suggests that people 
will act as if they anticipate inflation, 
for example, to be what they have been 
experiencing, and suggests that people 
will react to policies based on what 
they expect to occur because of them.
L. the 'conflict' between the developed nations 
and the underdeveloped and developing countries 
as to which policies to pursue and as to who 
should set them, regarding their development,
technology transfer, and their financing. 
M. largely under the control of the Federal Reserve,
it deals with such things as money supply and interest rates.
N. suggested by Milton Friedman and proposed 
by Nixon, about all that came from it was the 
Earned Income Credit.
O. the rate of interest which the Fed charges 
member banks when they borrow money from it 
-- it also functions as an anchor for interest 
rates in general.
P. purports to demonstrate the relationship 
between tax rates and government receipts 
from them, such that at high rates of taxation, 
the revenue the government collects will be in 
an inverse relation to the rate.
Q. the idea that as government borrowing increases, 
credit available to the private sector will be limited,
and interest rates will respond by rising.
R. the accumulated indebtedness of of US federal budgets.
S. include such measures as wage and price controls,  
but also changes in marginal tax rates such as
those included in the graduated income tax.
T. the actions of the Fed of selling securities 
to reduce the money supply, and buying them 
to enlarge it.
U. the idea that some economies are better 
suited to certain economic activities 
than are others.
V. set by the Fed, these are the requisite 
'downpayment' to purchase securities.
W. among its basic theories is the notion 
that economic activity will change in response 
to government policies impacting on the 
money supply, such that contractions follow 
reductions in the money supply.
X. the portion of most deposits which banks 
must hold and not invest or loan; 
they are held for daily transactions, and are 
put 'on deposit' at the Fed branch the district 
of which the bank is located within; 
decreasing the ratio will increase the money supply, 
and vice versa.
Y. its basic assumption is that there is 
an inverse relationship between economic growth rates 
and the unemployment rate, such that at full employment 
the rate of economic growth cannot be readily increased 
-- it overlooks the limitations of the unemployment rate
 statistic and it also does not take into account 
the difference between economic growth and 
economic development, the latter of which may lead 
to higher rates of economic activity even where 
there is statistical full employment.
Z. holds that an increase in the quantity of money 
will lead to an increase in price levels.
AA. basic monetarist prescription that 
the money supply should increase at a constant rate, 
and that Fed or other policies which vacillate 
from that will produce inflation or economic stagnation.
BB. the flow of US dollars and foreign currency 
in and out of the economy -- it includes financial 
fluxes above and beyond, but inclusive of, 
the trade balance.
CC. medium of exchange, standard of value, 
store of value, standard of deferred payment.
DD. the difference between purported potential 
and actual levels of output. 


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