1. You put in $25,000 for reserve requirements in your Initial Reserve Allocation decision. Why is the reserve requirement on the balance sheet (Required Reserves) showing a different number?

A. The Initial Reserve Allocation is lower than the amount required.

B. The Initial Reserve Allocation is higher than the amount required.

2. Based on the previous question, why didn't the difference between the Initial Reserve Allocation decision and the Required Reserves go to "Excess Reserves"?

A. The bank is underfunded (assets initially exceed liabilities), so ER was reduced to zero.

B. The bank has sufficient funding, so those funds were placed in Fed Funds Sold and lent to other banks.