Question 5. Suppose that in Country B, financial institutions use new technology to prevent credit card fraud. Assume that this action reduces the risk of using credit cards and makes consumers less...

Extracted text: Question 5. Suppose that in Country B, financial institutions use new technology to prevent credit card fraud. Assume that this action reduces the risk of using credit cards and makes consumers less likely to use cash for consumption. At the same time, the government in the country cuts spending to reduce budget deficits. Use the IS- LM model to predict the short-run impact on the interest rate and output. Illustrate your answer graphically. Be sure to label: į, the axes, ii. the curves iii. the initial equilibrium, iv. the direction the curves shift. Explain your answer in words.