SJSU Economics

Formulas

Information

• M1 money supply: currency/checking accounts, demand deposits, traveler's checks

• M2 money supply: M1 + savings deposits, money market funds, certificates of deposit

• open market operations: central bank sells/buys treasury bonds to influence amount of money and interest rates

• quantitative easing (QE): purchase of long term government and private mortgage-backed securities by central banks to stimulate aggregate demand

• floating exchange rate: country lets exchange rate market determine currency value

• hard peg: exchange rate policy where central bank sets fixed/unchanging value for exchange rate

• soft peg: exchange rate policy where government allows market to set exchange rate but sometimes intervenes

• Head Start program: program for early childhood education directed at families with limited educational/financial resources

• Ricardian equivalence: theory that rational private households might shift savings to offset government saving/borrowing

• twin deficits: occurs when country is running both trade and budget deficit