ABSTRACT
This chapter reviews two important international macroeconomic pillars. First, virtually all macroeconomic discussions center on three interconnected markets, namely the goods and services (G&S) market, foreign exchange (FX) market, and credit (CR) market. Changes in one simultaneously affect the other two, and, therefore, any analysis that considers only one or two of these markets, in isolation, is bound to be incomplete and/or incorrect. Second, most economic analyses in business publications, such as The Wall Street Journal, Financial Times, The Economist, and Business Week, can be understood by using the basic tools of supply and demand. A market brings together buyers and sellers to determine prices and quantities per period. Each of the major macroeconomic markets has a different price and quantity. Supply and demand analysis is a major pillar of international macroeconomics. The directional change in price is unequivocal because supply and demand movements reinforce each other.
