LEARNING OBJECTIVES
After you have read this section, you should be able to answer the following questions:
What is the credit market, and what determines the interest rate?
What is the labor market, and what determines the real wage?
What is the foreign currency market, and what determines the exchange rate?
The financial crisis of 2008 began in the housing market. But as the excerpts at the beginning of this chapter make clear, its effects rapidly spread beyond that market. Those excerpts talked of credit, jobs, and the impact of the crisis on foreign countries. We now look at the knock-on effects of the crisis and, in the process, describe three key macroeconomic markets: the credit market, the labor market, and the foreign exchange market. [***These markets are used in several places in the book. In particular, we look at labor in Chapter 8 "Jobs in the Macroeconomy", and credit and foreign exchange in Chapter 9 "Money: A User’s Guide".***]
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