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. If the bank is required to keep reserves equal to one-third of deposits, what is the level of the bank's excess reserves? How much money could the excess reserves be used to create in the
banking system as a result?
a. zero; zero
b. $300,000; $300,000
c. $300,000; $900,000
d. $700,000; $2,100,000
a
Economics
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