Exhibit 25-1 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 Exhibit 25-1.If the required reserve ratio is 25 percent,what is the level of the bank's excess reserves? How much could it loan out as a result?
A) zero; zero
B) $500,000; $500,000
C) $500,000; $2,000,000
D) $250,000; $1,000,000
Correct Answer:
Verified
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