Answer:
excess reserve = $100000
correct option is C $100,000
Step-by-step explanation:
given data
loan = $1 million
deposits = $2 million
reserve = $300,000
reserve ratio = 0.2
to find out
additional amount as reserve
solution
we know here
first we find here required reserve that is express as
required reserves = reserve ratio × deposits ..........1
required reserves = 0.2 × 2 million
required reserve = $400000
so
excess reserve is difference of actual reserve and required reserve that is
excess reserve = 400000 - 300000
excess reserve = $100000
correct option is C $100,000