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. 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
a
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