ECON 162 11 2 15 Second Model of Exchange Rate Determination Supply and Demand Analysis Two Relevant Markets 1 Market for foreign currency in home country 2 Market for home currency in foreign market Ex US and Japan 1 Market for Yen in US 2 Market for dollars in Japan Demand for Yen in US Supply of dollars in Japan Demand for dollars in Japan Supply of Yen in US Demand for a country s currency is a derived demand Assume 1 100 1 01 Dollar Depreciates Yen Appreciates 100 Increase in US demand for Japanese automobiles Chinese Pegging of Their Currency yuan Measuring Health of Labor Market 1 Unemployment Rate 2 Nonfarm Payroll Employment 3 Weekly Jobless Claims 4 Job Openings and Labor Turnover Survey Labor Force Consists of All Those Who Are Over 16 years of age Not retired Not student without a job Not institutionalized Unemployment Rate Number actively seeking but not finding work divided by the number in labor force times 100 Not household workers Not volunteers Not in military Actively seeking work or working
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