Scenario 11-2 A Bank's Assets Consist of $1 000 000 in Total

Multiple Choice

Scenario 11-2
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 Scenario 11-2.If the desired reserve ratio is 10 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 $700 000, and it could loan out $7 000 000.
B) Excess reserves are $300 000, and it could loan out $3 000 000.
C) Excess reserves are $700 000, and it could loan out $700 000.
D) Excess reserves are $300 000, and it could loan out $300 000.