A Bank Run Involves a Large Flow of Money

question 46

Multiple Choice

A bank run involves a large flow of money

• A)into bank depositors' accounts.
• B)into checking and savings accounts.
• C)out of depositors' accounts.
• D)out of individuals' cash reserves into money market funds.

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Definitions:

Bad Debts

Amounts owed to a company that are written off as uncollectible, typically from customers who fail to pay their invoices.

Credit Policy Relaxation

The act of making a company's criteria for extending credit more lenient, aiming to boost sales at the risk of higher bad debts.

Accounts Receivable

Unpaid dues from customers to a company for goods or services already delivered.

Zero Balance Accounts

A checking account in which a balance of zero is maintained by automatically transferring funds from a master account in an amount only large enough to cover checks presented.