What Is the Main Argument of the Proponents of a Fixed

question 81

Multiple Choice

What is the main argument of the proponents of a fixed exchange rate system for Canada?

• A)There is less uncertainty for importers,exporters and investors,and as a result there would be more trade,and the resulting gains from trade.
• B)The fixed exchange rate would act as a shock absorber and reduce the swings in output and employment.
• C)Canada's exports would be more attractive to the rest of the world,which would lead to a larger current account surplus.
• D)Investment in Canada would be more attractive to the rest of the world,which would lead to a larger capital account surplus.
• E)Canada is traditionally an exporting nation,and a fixed exchange rate is more advantageous for exporters.

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Definitions:

Efficient Tax System

An efficient tax system is one that collects government revenues with minimal economic distortion, allowing for effective allocation of resources without significantly hampering growth.

Deadweight Losses

Economic inefficiencies resulting from market distortions, typically leading to a loss of total societal welfare.

Administrative Burdens

The costs and obligations associated with compliance to rules, regulations, and administrative procedures for businesses and individuals.

Tax Evasion

Tax evasion is the illegal practice of not paying taxes by individuals, companies, or trusts, often by making false declarations or no declarations to tax authorities.