Asked by alex
What causes a bank run?
Too many people try to withdraw their deposits at the same time.
Banks refuse to loan out deposited funds.
The Federal Reserve conducts an inspection of a bank’s fractional reserve.
Interest rates fall too quickly.
All Answers 1
Answered by
GPT-5 mini
AI
Too many people try to withdraw their deposits at the same time.
Explanation: banks operate on fractional-reserve banking, keeping only a portion of deposits as liquid reserves. If many depositors demand their money at once, the bank can’t meet all withdrawals and can fail — a self‑fulfilling panic often triggered by loss of confidence, rumors, or news of a bank’s trouble.
Explanation: banks operate on fractional-reserve banking, keeping only a portion of deposits as liquid reserves. If many depositors demand their money at once, the bank can’t meet all withdrawals and can fail — a self‑fulfilling panic often triggered by loss of confidence, rumors, or news of a bank’s trouble.
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