Exhibit 25-2 a Bank's Assets Consist of $1,000,000 in Total

question 79

Multiple Choice

Exhibit 25-2 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 Exhibit 25-2.If the bank is required to keep reserves equal to one-third of deposits,what is the level of the bank's excess reserves? How much money could the excess reserves be used to create in the banking system as a result?

• A) zero; zero
• B) $300,000; $300,000
• C) $300,000; $900,000
• D) $700,000; $2,100,000

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