Because a Compensating Balance Is the Proportion of a Loan

question 50

True/False

Because a compensating balance is the proportion of a loan that must be kept on deposit at the lending institution, the actual return to the lender on the usable portion of these loans is higher.

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Definitions:

Industrial

Pertaining to industry or manufacturing, characterized by the mass production of goods and the extensive use of machinery and factories.

Division Of Labor

The allocation of different tasks or jobs to different people or groups, typically to improve efficiency and productivity.

Postindustrial Societies

Societies characterized by an economy dominated by services and information processing rather than the production of goods.

Capitalist Market Theory

An economic theory emphasizing private ownership of production means, creating goods and services for profit in competitive markets.