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1) If reserve requirements were set to 100%, there would be no moral hazard problem in the banking industry

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1) If reserve requirements were set to 100%, there would be no moral hazard problem in the banking industry.

2) If the reserve requirements on all deposits were set equal to 0, then the Federal Reserve would lose control of the money supply.

3. In fulfilling its role as the lender of last resort the Federal Reserve adds to the adverse selection problem in banking.