Key Interactions Among the Main Four Markets (+ indicates in same direction, - indicates inversely)

Financial Market Outcomes Impacts on Product Market

Interest Rates affect GDP and Inflation (-)
Overall State of Financial Market affects GDP and Inflation (+)

Financial Market Outcomes Impacts on International Market

Interest Rates affect FAB (+)
Overall State of Financial Market affects FAB (+)

Product Market Outcomes Impacts on Labor Market

GDP affects Unemployment (-)
GDP affects Wage Rates (+) (if flexible)

Product Market Outcomes Impacts on Financial Market

GDP affects Interest Rates (+)
Inflation affects Interest Rates (+)

Product Market Outcomes Impacts on International Market

GDP affects Current Account Balance (-)
GDP affects Financial Account Balance (+)
Inflation affects Overall Balance (-)

Labor Market Outcomes Impacts on Product Market

Wage Rates affect GDP (-)
Wage Rates affect Inflation (+)
Unemployment affects Inflation (-)

International Market Outcomes Impacts on Financial Market

Portfolio flows affect Interest Rates (-)

International Market Outcomes Impacts on Product Market

Exchange Rates affects AD (-)
Foreign economic growth affects AD (+)
FDI affects AD (+)

Some Important Summary Connections

Stronger/Weaker overall AD/GDP raises/lowers interest rates
App/Dep exchange rate lowers/raises AD
Better/Worse economic policies raises/lowers AS, AD, and interest rates, and moves Overall Balance
toward surplus/deficit