After working through this chapter, you will understand:
1 What the national-economy Mundell–Fleming model is, and how it differs from the global-economy model.
2 How fiscal policy affects equilibrium income in the Mundell–Fleming model.
3 How monetary policy affects equilibrium income in the Mundell– Fleming model.
4 How demand shocks in general, including those originating from abroad, affect equilibrium income.
5 The difference between comparative statics and adjustment dynamics.
6 How things alter if prices are permitted to change.