The price level in incomplete markets models is globally unique, determined by the balance of demand and supply in the goods market. Monetary policy affects prices through setting nominal interest rates, while fiscal policy ensures budget constraints are met. This model predicts a single equilibrium in response to fiscal stimulus with a pegged interest rate. Inflation rate equals the growth rate of nominal government spending in the absence of output growth. This theory suggests that government spending influences aggregate demand, prices, and key economic policies.