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Suppose the Canadian economy slips into a recession. In response, the Bank of Canada cuts the target for overnight rate in order to avoid unemployment.
Suppose the Canadian economy slips into a recession. In response, the Bank of Canada cuts the target for overnight rate in order to avoid unemployment. Determine what happens to the following under a floating exchange-rate regime
a. Domestic investment would(increase, decrease, be unchanged)
b. Capital inflow would (increase, decrease, be unchanged)
c. Capital outflow would (increase, decrease, be unchanged)
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