A 2-D numerical model is used to compare interactions between small-scale (SS) (25 km horizontal wavelength, 10 min period) and medium-scale (MS, 250 km horizontal wavelength, 90 min period) gravity waves (GWs) in the Mesosphere and Lower Thermosphere within three different limits. First, the MS wave is specified as a static, horizontally homogeneous ambient atmospheric feature; second, a linear interaction is investigated between excited, time-dependent SS and MS waves, and third, a fully nonlinear interaction at finite amplitudes is considered. It is found that the finite-amplitude wave interactions can cause SS wave breaking aligned with the phase fronts of the MS waves, which induces a permanent mean flow and shear that is periodic in altitude. This impedes SS wave propagation into in the upper thermosphere and dissipation by molecular diffusion, when compared to linear amplitude simulations. Linear cases also omit self-acceleration-related instabilities of the SS wave and secondary wave generation, which modulate the MS wavefield. Neither the linear or nonlinear cases resemble the static approximation, which, by reducing a dynamic wave interaction to a static representation that is vertically varying, produces variable momentum flux distributions that depend strongly upon the amplitude and phase of the larger-scale wave. This is an approximation made by GW parameterization schemes, and results suggest that including time-dependent effects and feedback mechanisms for interactions between resolved and parameterized waves will be an important area for future investigations especially as general circulation models begin to resolve MS GWs explicitly.