A Bank Run Is Unlikely to Occur in Canada Today

question 41

Multiple Choice

A bank run is unlikely to occur in Canada today because

• A)if necessary,the central bank can provide all the reserves that are necessary to avoid this situation.
• B)the commercial banks are required by law to maintain 100% of their deposits in cash.
• C)there is relatively little demand for cash at present.
• D)banking is done mostly electronically.
• E)the commercial banks hold enough government securities that are convertible into cash.

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Definitions:

Economic Interests

The financial stakes or concerns in a policy, project, or action that motivates individuals, groups, or nations.

Popular Sovereignty

The idea that a state's power and governance are established and upheld with the approval of its citizens, via their chosen delegates.

Articles of Confederation

The first constitution of the United States, ratified in 1781, which established a weak federal government and was eventually replaced by the current U.S. Constitution in 1789.

Armed Forces

The combined military forces of a nation, including its army, navy, air force, and other branches, responsible for defense and other state-sanctioned activities.