Use the Following Information for Questions

Multiple Choice

Use the following information for questions
Suppose that the banking industry is competitive and it has zero equity.The effective legal reserve requirement is 25%.Assume that there are three banks, A, B, and C.Bank A initially receives $2,500 in deposits.
-Suppose that the effective legal reserve requirement is now 40%.Bank A loans out its excess reserves, which are deposited in Bank B.How much excess reserves does Bank B have?

A) $1,500
B) $1,000
C) $900
D) $750
E) $600