One reason why financial panics in the United States in the nineteenth and early twentieth centuries resulted in less bank lending is that
A)depositors converted significant amounts of bank deposits to currency.
B)banks shifted from loans to purchases of U.S. government securities as the yields on these securities rose sharply.
C)the U.S. government restricted bank lending in order to free funds to cover its budget deficits.
D)companies shifted from bank loans to the bond market as rates on bonds dropped below rates charged by banks.

Question

Quizplus · Accepted Answer

During financial panics, depositors often lose faith in the stability of banks and withdraw their deposits in the form of currency. This reduces the amount of funds that banks have available to lend, which can contribute to a decrease in bank lending overall.

One Reason Why Financial Panics in the United States in the Nineteenth