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 30 percent, 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. 50,000; 50,000
c. 50,000; 500,000
d. The bank has insufficient reserves to meet its reserve requirements.
Question 2
The actual rate of inflation is equal to the expected rate of inflation along the:
a. downward-sloping Phillips curve.
b. upward-sloping aggregate supply curve.
c. horizontal aggregate supply curve.
d. downward-sloping aggregate demand curve.
e. vertical Phillips curve.
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