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Car air conditioners usually have the option to choose circulate on/off. What about house air conditioners? For instance, does a window air conditioner exchange air inside and outside the house?

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What you're after is an HVAC system. Heating, Ventilation, and Air Conditioning.

Excerpt from HVAC Wikipedia article:

The three central functions of heating, ventilating, and air-conditioning are interrelated, especially with the need to provide thermal comfort and acceptable indoor air quality within reasonable installation, operation, and maintenance costs. HVAC systems can provide ventilation, reduce air infiltration, and maintain pressure relationships between spaces. The means of air delivery and removal from spaces is known as room air distribution.

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Generally, no, air conditioners for homes do not draw in fresh air.

If you want fresh air you need an air-to-air heat exchanger. This brings in air from the outside and exhausts air to the outside at the same time, but moves the heat from one air flow to the other. In the winter, the outgoing air gives up its heat to the incoming air, while during the cooling season the incoming air gives up its heat to the outgoing air. You have to make sure to get one that supports both types of exchanges because many only heat the incoming air.

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Also referred to as an HRV or "Whole house air exchanger" – BMitch Jun 5 '13 at 2:16
HRVs can provide sensible cooling of the incoming air -- what they cannot do that ERVs do is transfer latent load. – ThreePhaseEel Nov 29 '15 at 21:12

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