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 20 percent, what is the level of the bank's excess reserves? How much could it loan out as a result?
a. $100,000; $100,000
b. $100,000; $400,000
c. $400,000; $500,000
d. $400,000; $2,000,000
a
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a. True b. False
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