Problem
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.
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.