If a Bank Has $1,000,000 in Reserves and Checking Deposits

Multiple Choice

If a bank has $1,000,000 in reserves and checking deposits of $3,000,000, what is the bank's reserve position if the required reserve ratio is 20 percent?

A) The bank has $500,000 of required reserves and $500,000 of excess reserves.
B) The bank has $600,000 of required reserves and $400,000 of excess reserves.
C) The bank has $400,000 of required reserves and $600,000 of excess reserves.
D) The bank has $200,000 of required reserves and $800,000 of excess reserves.