Exhibit 25-2 a Bank's Assets Consist of $1,000,000 in Total

Exhibit 25-2 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 Exhibit 25-2.If the required reserve ratio is 10 percent,what is the level of the bank's excess reserves? How much could it loan out as a result?

A) $700,000; $700,000
B) $700,000; $7,000,000
C) $300,000; $300,000
D) $300,000; $3,000,000

Correct Answer:

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