Compensating Balances

question 6

Multiple Choice

Compensating balances

• A) are used by banks as a substitute for charging service fees.
• B) are created by having a sweep account.
• C) generate returns to customers from interest-bearing accounts.
• D) are used to reward new accounts.

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Definitions:

Real GDP

An economic metric that measures the value of all goods and services produced by a country in a year, adjusted for inflation, reflecting the real growth.

GDP Deflator

An economic metric that converts the money-value measure of GDP into an index for quantity comparison by deflating price inflation.

Real GDP

The calculation of a nation's economic production, accounting for variations in prices due to inflation or deflation, to represent the actual value of goods and services generated.

Real Terms

Adjusted for inflation, reflecting the actual purchasing power of money.