Question $23(1$ point$)$

Scenario $11-1$

A bank's assets consist of $$500000$ in total reserves, $$1600000$ in loans, and a building worth $$1200000.$ Its liabilities and capital consist of $$2000000$ in demand deposits and $$1300000$ in capital.

Refer to the scenario. If the desired reserve ratio is $20$ percent, what is the level of the bank's excess reserves and how much could it loan out as a result?

Excess reserves are $$400000,$ and it could loan out $$500000.$

Excess reserves are $$400000,$ and it could loan out $$2000000.$

Excess reserves are $$100000,$ and it could loan out $$100000.$

Excess reserves are $$100000,$ and it could loan out $$400000.$