A Lender May Require a Compensating Balance, Which Means That

question 89

True/False

A lender may require a compensating balance, which means that the amount of funds is reduced, causing the rate of interest to increase, since the same amount of interest is paid and fewer funds are available.

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Definitions:

Reinforcement

In behavioral psychology, a process that increases the likelihood of a behavior by applying a stimulus after the behavior is exhibited.

Reinforcers

Stimuli that, when presented after a behavior, increase the likelihood of that behavior being repeated.

Neutral Stimulus

A stimulus that initially produces no specific response other than focusing attention until it is paired with an unconditioned stimulus.

Biologically Significant

Pertaining to factors or impact of considerable importance for biological processes or survival.