You have $5,700 at a local bank. You hear a rumor that the bank is going to fail. You rush over to the bank to withdraw your money and find many other bank customers who all want to withdraw their money from the bank. The scenario described here is a:
A)regular day at the bank.
B)bank run.
C)result of the Federal Reserve being the lender of last resort.
D)sale of government bonds.

Question

Quizplus · Accepted Answer

A bank run occurs when many customers of a bank withdraw their money at the same time due to rumors of the bank's instability or failure. This causes a shortage of cash for the bank, which can lead to insolvency and bankruptcy.

You Have $5,700 at a Local Bank