Question: Explain how the flexible exchange rate acts as an automatic stabilizer in the Mundell-Fleming small open economy model of the short run (with completely sticky

Explain how the flexible exchange rate acts as an automatic stabilizer in the Mundell-Fleming small open economy model of the short run (with completely sticky goods prices) by thinking about the effects of an adverse (negative) terms of trade shock (in which autonomous net exports NX0 decreases), particularly in the context of Canada when world real commodity prices decreases.

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