The exchange rate changes as other variables change, such as the domestic interest rate and the foreign interest rate. As shown in the Foreign Exchange Model, the y-axis represents the exchange rate E, and the x-axis represents the quantity of dollar assets. The supply curve is vertical, while the demand curve slopes downward. In 2002 (Figure 1), the exchange rate E = 9, where the supply and demand curves intersect. In 2012 (Figure 2), an increase in the domestic interest rate causes the demand curve to shift rightward, raising the exchange rate to E = 12. In 2022 (Figure 3), a large increase in the foreign interest rate causes the demand curve to shift leftward, lowering the exchange rate to E = 6.