Suppose the Canadian economy slips into a recession. In response, the Bank of Canada cuts the target for the overnight rate in order to avoid unemployment. Consider what happens to the following under a floating exchange-rate regime. Briefly explain. 

a. Domestic investment. 

b. Capital inflow. 

c. Capital outflow. 

d. Exchange rate. 

e. Net exports. 

f. Aggregate demand. 

g. Reevaluate the previous problem assuming the Canadian economy follows a fixed-exchange-rate regime.

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It is given that the nationC slips into recession The central bank cuts the target for overnig... View the full answer