Northern Bank: Balance Sheet Assets Liabilities

Northern Bank: Balance Sheet Assets Liabilities
Reserves $800 Deposits $10 000
Loans $11 200 Capital $2000
$12 000 $12 000
TABLE 26-6
Refer to Table 26-6.Assume that Northern Bank's target reserve ratio is 10%.In order to achieve its target reserve ratio,Northern Bank must ________ and ________.

A) increase its reserves by $200; decrease its deposits by $200
B) increase its reserves by $400; decrease its deposits by $400
C) not change its reserves; not change its deposits
D) increase its reserves by $200; decrease its loans by $200
E) increase its reserves by $400; increase its loans by $800