Please note that answers C and D are both incorrect.

Aqua Bank has $160M in deposits, $16M in required reserves, $24M in excess reserves, and $120M in loans. If the Federal Reserve lowers the reserve ratio from 10% to 8%, what is Aqua Bank likely to do with the additional excess reserves? Aqua Bank is likely to hold those reserves and is unlikely to make additional loans Aqua Bank is likely to borrow more funds in the market for federal funds Aqua Bank is likely to lend money in the market for federal funds Aqua Bank is likely to use those reserves to make additional loans