A Compensating Balance Arrangement Between a Firm and Its Bank

question 163

Multiple Choice

A compensating balance arrangement between a firm and its bank:

• A)increases the return on the loan to the bank.
• B)forces the firm to keep a minimum balance in its checking account.
• C)increases the cost of the loan to the firm.
• D)All of the above

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Definitions:

Illegal Immigrant Workers

refers to individuals who are employed in a country without the legal right to work there, often under exploitative conditions.

Hired

The process of engaging an individual's services for employment under agreed-upon terms and conditions.

Equilibrium Wage

The wage rate at which the quantity of labor supplied by workers equals the quantity of labor demanded by employers, resulting in a stable labor market.

Illegal Immigrants

Individuals who enter or reside in a country without legal permission or overstay their authorized period.