A bank run occurs when many depositors of a bank rush to withdraw their deposit money in the form of cash, usually due to concerns about the bank's solvency. This can lead to a liquidity crisis for the bank, as it may not have sufficient cash reserves to meet the demands of all depositors. Bank runs can spread quickly and lead to broader financial instability.

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What Is a Bank Run

Question 49

Multiple Choice

What is a bank run?

A) A situation where a commercial bank is holding zero reserves.
B) A panic situation where many depositors rush simultaneously to withdraw their deposit money in the form of cash.
C) A situation where all commercial banks in the system are simultaneously short of reserves.
D) The collapse of a non-commercial bank as a result of non-payment of loans,which leads to a recession.
E) The collapse of a commercial banks as a result of the devaluation of their assets.

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