1. A bank holds $700 million in deposits. The reserve requirement is 10%, and the bank currently has $80 million in reserves. The bank has given out loans of $720 million. The highest amount the bank can afford to lose to loan defaults without going bankrupt (of the amounts given below) is:

a. $10 million

b. $79 million

c. $99 million

d. $699 million

2.Assume that the exchange rate between US dollars and Chinese yuan starts at 6.9 yuan to a dollar and goes to 6.7. This means that the US dollar ____ versus the yuan and US exports probably _____ .

a. appreciated, fell

b. appreciated, rose

c. depreciated, fell

d. depreciated, rose