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2007 VW Jetta Wolfsburg Edition Air Conditioning issue.

Having an issue with the thermostat controlled AC on my 2007 Wolfsburg Edition Jetta. It appears that the digital temperature display controls when the AC is on. Sometimes the temperature will suddenly drop extremely low and the AC will cut off. Most of the time the AC will not even come on.
Is there a temperature sensor feeding this info and if so, could it be bad. Would like to know where to locate it on the car if it is a sensor!
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