A Minimum Cash Balance Required by a Bank Is Called

question 10

Multiple Choice

A minimum cash balance required by a bank is called

• A) cash in bank
• B) a cash equivalent
• C) a compensating balance
• D) an EFT

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Definitions:

Surplus Payment

Payment or benefit received that exceeds the minimum amount necessary for the transaction or exchange to occur.

MB = MC Rule

The principle that firms maximize profit by producing where marginal benefit (MB) equals marginal cost (MC), determining the optimal level of output.

Loanable Funds Theory

An economic theory that describes the market for borrowing and lending, where interest rates are determined by the supply of and demand for loanable funds.

Nominal Rate of Interest

The nominal interest rate on a loan or investment, before adjusting for inflation.