Multiple Choice
Scenario 11-1
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 Scenario 11-1.If the desired reserve ratio is 25 percent,what is the level of the bank's excess reserves and how much could it loan out as a result?
A) Excess reserves are $500 000, and it could loan out $2 000 000.
B) Excess reserves are $500 000, and it could loan out $500 000.
C) Excess reserves are zero, and it could not loan out any money.
D) Excess reserves are $250 000, and it could loan out $1 000 000.
Correct Answer:

Verified
Correct Answer:
Verified
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