3. The government of Canada is contemplating adding a pharmacare program (the government would be paying...

 

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3. The government of Canada is contemplating adding a pharmacare program (the government would be paying for all medication for Canadians). a) Explain what will be impacted if anything in the IS-LM model. (this will increase MPC, explain what will take place after that) b) Since funding a program like this could not be done one borrowing alone, an increase in tax is incredibly likely. Explain what would take place if the pharmacare program takes place and taxes increase at the same time. Should we expect higher interest rates, output, and investments? Discuss. c) Illustrate a), b) and the possible changes to the mentioned variables in b) (keeping in mind that prices are fixed) 3. The government of Canada is contemplating adding a pharmacare program (the government would be paying for all medication for Canadians). a) Explain what will be impacted if anything in the IS-LM model. (this will increase MPC, explain what will take place after that) b) Since funding a program like this could not be done one borrowing alone, an increase in tax is incredibly likely. Explain what would take place if the pharmacare program takes place and taxes increase at the same time. Should we expect higher interest rates, output, and investments? Discuss. c) Illustrate a), b) and the possible changes to the mentioned variables in b) (keeping in mind that prices are fixed)

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a In the ISLM model the implementation of a pharmacare program that covers all medication expenses for Canadians would likely increase the marginal pr... View the full answer