Scenario 11-2 A Bank's Assets Consist of $1 000 000 in Total

question 114

Multiple Choice

Scenario 11-2
A bank's assets consist of $1 000 000 in total reserves, $2 100 000 in loans, and a building worth $1 200 000. Its liabilities and capital consist of $3 000 000 in demand deposits and $1 300 000 in capital.
-Refer to Scenario 11-2.If the desired reserve ratio is 40 percent,what is the level of the bank's excess reserves?

• A)Excess reserves are $500 000.
• B)Excess reserves are zero.
• C)The bank has insufficient reserves to meet its reserve requirements.
• D)Excess reserves are $200 000.

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