Learning objectives ■ The Mundell-Fleming model: IS-LM for the small open economy Causes and effects of interest rate differentials Arguments for fixed vs.floating exchange rates The aggregate demand curve for the small open economy CHAPTER 12 Aggregate Demand in the Open Economy slide 1 slide 1 § The Mundell-Fleming model: IS-LM for the small open economy § Causes and effects of interest rate differentials § Arguments for fixed vs. floating exchange rates § The aggregate demand curve for the small open economy