1.Recently many large commercial and retail banks have been choosing to increase the amount of excess reserves they hold in the Federal Reserve, and this has caused an increase in the money multiplier and the money supply.

True

False

2. Which of the following is an example of moral hazard?

		a) A person with a pre-existing heart condition has trouble getting health insurance
		b) Bank managers who are compensated with high bonuses for high bank profits may take on more risk than shareholders prefer
		c) A man with huge losses in Las Vegas hides his financial condition while applying for a home mortgage