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The balance sheet of the bank Mutual of Hamsterville is shown below. Assets Liabilities & Equity [begin{aligned} text{Business loans}: &$100,000 text{Government securities}: &$20,000 text{Reserves}:
The balance sheet of the bank Mutual of Hamsterville is shown below. Assets Liabilities & Equity \[\begin{aligned} \text{Business loans}: &\$100,000\\\\ \text{Government securities}: &\$20,000 \\\\ \text{Reserves}: &\$40,000 \end{aligned}\] \[\begin{aligned}\text{Checkable deposits:} &\$100{,}000\\\\ \text{Owner's equity:} &\$60{,}000\end{aligned}\] \[\text{Total Assets:} \$160{,}000\] \[\text{Total Liabilities \& Equity:}\$160{,}000\] How do excess reserves change if the central bank lowers the reserve requirement from \[25\%\] to \[20\%\]? Choose 1 answer: Choose 1 answer: (Choice A) Excess reserves decrease by \[\$5{,}000\]. A Excess reserves decrease by \[\$5{,}000\]. (Choice B) Excess reserves increase by \[\$8{,}000\] B Excess reserves increase by \[\$8{,}000\] (Choice C) Excess reserves decrease by \[\$8{,}000\]. C Excess reserves decrease by \[\$8{,}000\]. (Choice D) Excess reserves increase by \[\$5{,}000\]. D Excess reserves increase by \[\$5{,}000\]. (Choice E) Excess reserves don't change E Excess reserves don't change
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