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12. Third National Bank has total assets of $10,000 and owners equity of $200. One of its investments increases in value from $1,000 to $2,000. If Third National Bank wants to maintain its leverage ratio of 50:1, how should it respond? A. Increase its equity by $50,000 B. Increase its debt by $1,000 C. Increase its debt by $49,000 D. Increase its debt by $50,000

13. Which of the following is true about the slope of the asset and/or transaction demand for money? A. Transaction demand is a horizontal line because the interest rate is constant B. Asset demand slopes down because, when interest rates are low, the opportunity cost of holding money is low C. Asset demand slopes down because, when interest rates are low, people will want to spend more money on luxury items D. Transaction demand slopes down because when interest rates are low, people will spend less money on essential items

14. Which of the following is true about the slope of the money supply curve A. It slopes up because the quantity supplied increases as the price of money increases B. It is a vertical line because the money supply is determined directly by the Fed, not by interest rates C. It is a vertical line because the supply of money can never be changed D. It slopes up because the Fed can shift the supply to the left or right whenever it wants to

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