A bank that has assets of $85 billion and a net worth of $10 billion must have
A) liabilities of $75 billion.
B) excess reserves of $10 billion.
C) liabilities of $10 billion.
D) excess reserves of $75 billion.

Question

Quizplus · Accepted Answer

In the balance sheet equation, Assets = Liabilities + Net worth. Therefore, liabilities can be calculated as Assets - Net worth. Thus, the bank must have liabilities of $75 billion (Assets of $85 billion minus Net worth of $10 billion).

A Bank That Has Assets of $85 Billion and a Net