How Might a Canadian Federal Budget Surplus Affect the Balance

question 280

Multiple Choice

How might a Canadian federal budget surplus affect the balance of trade? (Assume exchange rates are stated in terms of foreign currency per Canadian dollar.)

• A)A federal budget surplus raises interest rates, which raises exchange rates and increases the balance of trade.
• B)A federal budget surplus raises interest rates, which raises exchange rates and reduces the balance of trade.
• C)A federal budget surplus reduces interest rates, which raises exchange rates and reduces the balance of trade.
• D)A federal budget surplus reduces interest rates, which reduces exchange rates and increases the balance of trade.
• E)A federal budget surplus reduces interest rates, which raises exchange rates and increases the balance of trade.

---

Definitions:

Severance Payments

Compensation provided to employees upon dismissal or termination from a company that is usually based on length of service.

Dismissed Executives

Senior employees who have been removed from their positions within a company, often due to performance issues, restructuring, or changes in strategic direction.

Lag The Market

A compensation strategy where an organization deliberately sets wage levels below the average market rate, often due to financial constraints or strategic choice.

Compensation Strategy

A plan established by an organization to determine how to reward employees effectively, taking into account salaries, benefits, bonuses, and other forms of compensation.