Balance Sheet 15-A A Bank's Assets Consist of $500,000 in Total Reserves, $1,600,000

question 38

Multiple Choice

Balance Sheet 15-A
A bank's assets consist of $500,000 in total reserves, $1,600,000 in loans, and a building worth $1,200,000. Its liabilities and capital consist of $2,000,000 in demand deposits and $1,300,000 in capital.
-Refer to Balance Sheet 15-A.If the required reserve ratio is 20 percent, what is the level of the bank's excess reserves? How much could it loan out as a result?

• A)$100,000; $100,000
• B)$100,000; $400,000
• C)$400,000; $500,000
• D)$400,000; $2,000,000

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Definitions:

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