Use the AD AS model to compare the short run and long run
Use the AD/AS model to compare the short-run and long-run impacts of a recession in the US economy (i.e. a reduction in Canadian exports to the US) on the Canadian economy under a flexible exchange rate regime versus a fixed exchange rate regime. Be sure to explain the impacts on interest rates, capital flows, exchange rates and the money supply? Under which regime are the short-run effects on Canadian national income more pronounced?

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