The Canadian Government Introduced the Tax- Free Savings Account (TFSA)in

question 59

Multiple Choice

The Canadian government introduced the Tax- Free Savings Account (TFSA) in 2009,which allows Canadians to earn tax- free investment returns on a limited amount of savings each year.In theory,and all else remaining equal,what do we expect the effect of such a policy to be on the market for financial capital?

• A)The supply of saving curve shifts left,the equilibrium interest rate rises and investment decreases.
• B)The investment demand curve shifts right,the equilibrium interest rate rises and investment rises.
• C)There will be no effect on the market for financial capital.
• D)The investment demand curve shifts left,the equilibrium interest rate falls and investment falls.
• E)The supply of savings curve shifts right,the equilibrium interest rate falls and investment increases.

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Definitions:

Generate Future Income

The process or strategy of creating or increasing earnings or revenue streams for a person or entity in subsequent periods.

Net Income

Net Income is the total profit of a company after all expenses, taxes, and costs have been subtracted from total revenue.

Cash Provided

Funds that are generated and made available by a business through its operational activities, investments, or financing.

Investing Transactions

Financial activities related to the purchase or sale of long-term assets and investment securities.