7
AssignmentMultiple Choice

Federal Tax Forms

Question 7 • FL-2102373-Personal Finance and Money Management Honors

What causes a bank run?

Answer
A
Too many people try to withdraw their deposits at the same time.
B
Banks refuse to loan out deposited funds.
C
The Federal Reserve conducts an inspection of a bank’s fractional reserve.
D
Interest rates fall too quickly.

Explanation

A bank run happens when many depositors lose confidence in a bank and try to withdraw their money at the same time. Banks keep only part of their deposits readily available, so a sudden wave of withdrawals can leave the bank unable to meet everyone’s requests. Thus, the correct choice is “Too many people try to withdraw their deposits at the same time.”

AI-written and checked against the verified answer.

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