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"It Is in the Interest of Each Depositor to Withdraw

question 30

Essay

"It is in the interest of each depositor to withdraw her money from a bank if all other depositors are doing the same, even when the bank's assets are sound." Discuss. As part of your answer clearly state whether the statement is true or false.


Definitions:

Standard of Value

A recognized measure that people use to set prices and make economic evaluations, such as a currency.

Finance Companies

Businesses that offer short-term loans at substantially higher rates of interest than banks.

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