When all depositors converge on a bank to remove their deposits there is a:
A) bank run
B) bank panic
C) liquidity crisis
D) financial meltdown
E) insolvency

Question

Quizplus · Accepted Answer

When all depositors converge on a bank to remove their deposits, it results in a bank run, which refers to a situation wherein a large number of depositors withdraw their deposits from a bank, leading to the depletion of the bank's reserves and potentially causing it to fail. A bank panic is a broader term that refers to a situation where there is a general loss of confidence in the banking system, which may lead to bank runs on multiple banks. A liquidity crisis refers to an event in which an individual or an organization is unable to meet its short-term obligations due to a lack of cash or liquid assets. A financial meltdown is an extreme and prolonged recession or depression that affects the entire financial system. Insolvency refers to a situation where an individual or an organization is unable to meet its financial obligations and repay its debts.

When All Depositors Converge on a Bank to Remove Their