A Compensating Balance Arrangement Usually Causes the Company to

question 63

Multiple Choice

A compensating balance arrangement usually causes the company to

• A)increase its interest income.
• B)increase the effective interest rate on corporate borrowing.
• C)decrease the effective interest rate on corporate borrowing.
• D)exhibit no change in the effective interest rate on corporate borrowing.

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Definitions:

Skilled Craftsmen

Workers who have specialized in a particular trade or craft through extensive training and experience.

Industrial Workers

Individuals who are employed in sectors related to manufacturing, construction, and production, often involving manual labor.

American Federation of Labor

A prominent federation of labor unions in the United States, founded in 1886, which aimed to organize workers in skilled trades.

Welfare Capitalism

An approach where private companies provide social welfare services to their employees, including health care and pensions, to improve working conditions and loyalty.