A Compensating Balance: I

question 39

Multiple Choice

A compensating balance: I. is required when a firm acquires bank financing other than a line of credit.
II) increases the cost of short-term bank financing.
III) represents an opportunity cost to the lending institution.
IV) is often used as a means of paying for banking services received.

• A) I and III only
• B) II and IV only
• C) II and III only
• D) I and IV only
• E) I, II and IV only

Identify strategies used by countries to improve their trade position, including targeting foreign markets and protectionist measures.

Understand the concept of domestic exchange equations in various countries.

Identify which product a country has an absolute advantage in producing.

Differentiate between a tariff and other forms of trade barriers and understand their impact on government revenue.

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Definitions:

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