When converging at approximately the same altitude
Why this is the answer
Per CAR 602.19(2)(a), a power-driven aircraft must give way to balloons; an aeroplane towing a glider is still power-driven, so it gives way to a balloon. The tow privilege in 602.19(2)(d) only outranks other power-driven aircraft, not balloons.
Reference
TC AIM-RAC – Collision Avoidance – Right of Way CARs 602.19 – Right of Way
Question reproduced verbatim from Transport Canada’s PSTAR Study and Reference Guide (TP 11919E). The answer key is Transport Canada’s; the explanation is ours.
A study aid — not a substitute for the official guide, the CARs, or your instructor.