1 Equilibrium in the Mundell-Fleming model Y =C(Y-T)+I(r*)+G+NX(e) M/P L(r*,Y) e LM* Equilibrium Exchange rate TS* equilibrium level of income Return CHAPTER 12 Aggregate Demand in the Open Economy slide 8slide 8 Y e LM* M P  L(r * ,Y ) IS* Y  C (Y T )  I (r *)  G  NX (e) Equilibrium Exchange rate equilibrium level of income 1 Return