A banking panic is an episode in which:
A)depositors, spurred by news or rumors of possible bankruptcy of one bank, rush to withdraw deposits from the banking system.
B)commercial banks, fearing Federal Reserve sanctions, unwillingly participate in open-market operations.
C)commercial banks, concerned about high interest rates, rush to borrow at the Federal Reserve discount rate.
D)depositors, afraid of increasing interest rates, attempt to engage in discount-window borrowing at the Federal Reserve.

Question

Quizplus · Accepted Answer

In a 'banking panic,' news or rumors of the imminent bankruptcy of one or more banks leads bank depositors to rush to withdraw their funds.

A Banking Panic Is an Episode in Which