A Bank Run Is an Episode in Which

question 64

Multiple Choice

A bank run is an episode in which

• A) depositors,spurred by news or rumours of the possible bankruptcy of multiple banks,rush to withdraw deposits from the banking system.
• B) depositors,spurred by news or rumours of the possible bankruptcy of a particular bank,rush to withdraw deposits from that bank.
• C) commercial banks,concerned about high interest rates,rush to borrow from the overnight market.
• D) depositors,afraid of increasing interest rates,attempt to engage in borrowing from the Bank of Canada.
• E) the Bank of Canada,concerned about unusually rapid increases in the money supply,refuses to make loans to commercial banks.

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Definitions:

Cash Inflow

The total amount of money being transferred into a business, project, or financial product during a specific period, often resulting from sales, financing, or investments.

Incremental Sales

The additional revenue generated from a particular marketing or sales activity, beyond the ordinary sales figures.

Cash Operating Expenses

Expenses that a company must pay out in cash, such as salaries, utilities, and rent, related to its operational activities.

Incremental Sales

The addition to total sales generated by a specific business activity or decision, beyond what would have otherwise been achieved.