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(Solution) - The Lithuanian lita is currently pegged to the euro Using

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The Lithuanian lita is currently pegged to the euro. Using the IS-LM-FX model for Home (Lithuania) and Foreign (Eurozone), illustrate how each of the following scenarios affect Lithuania:
a. The Eurozone reduces its money supply.
b. Lithuania cuts government spending to reduce its budget deficit.
c. The Eurozone countries increase their taxes.


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This question was answered on: Jul 11, 2017

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