A compensating balance will be lower in periods of tight money than in periods of credit easing.

Name: A compensating balance will be lower in periods of tight money than in periods of credit easing.
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Quizplus · Accepted Answer

A compensating balance is typically higher in periods of tight money because banks are more concerned about liquidity and risk, and thus may require higher balances to offset the increased risk of lending. In periods of credit easing, banks are more likely to reduce these requirements.

A Compensating Balance Will Be Lower in Periods of Tight