6. First National Bank has assets of $500,000 and liabilities of $400,000. First National Bank's equality (net capital) is ____.

A. $900,000.

B. $400,000.

C. $100,000.

D. $500,000.

7. Refer to the table below. The required reserve ratio is 25%. If the First Charter Bank is meeting its reserve requirement and has no excess reserves, its loans equal ____.

Assets Liabilities

Reserve ----- $800 Deposits

Loans ----- $400 Net Worth

Total ----- $1,200 Total

A. $900.

B. $1,000.

C. $600.

D. $1,800.

8. The Bank of Green Oak has $2 million in deposits and $400,000 in reserves. If excess reserves are equal to $100,000, the required reserve ratio is ____.

A. 15%.

B. 10%.

C. 20%.

D. 5%.

9. Suppose the required reserve ratio is 15%. A $30 million deposit will, at most, allow an expansion of the money supply to ____.

A. $167 million.

B. $200 million.

C. $150 million.

D. $250 million.

10. Considering a recession may happen next year. Commercial banks are more conservative in their lending policies and start holding some excess reserves. Compared to a situation in which banks are not holding excess reserves, the size of the money supply will be ____.

A. depending on fiscal policy

B. larger.

C. the same.

D. smaller.