A Compensating Balance Requirement Means That a Lending Institution Will

question 17

True/False

A compensating balance requirement means that a lending institution will require a borrowing company to keep a certain percentage of the loaned amount on deposit with that institution.

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Definitions:

Alderfer

Refers to Clayton Alderfer's ERG theory, which categorizes human needs into three groups: existence, relatedness, and growth.

Motivation Theories

Theoretical frameworks that explain how individuals are motivated to achieve their goals and how this motivation influences their behavior.

Expectancy Theory

A motivational theory suggesting that individuals are motivated to act in a certain way based on their expectation that the act will be followed by a desired outcome.

Instrumentality

In motivation theory, the perceived relationship between performing a specific behavior and achieving certain outcomes, emphasizing the means-to-an-end belief.