If uncertainty about banks' health causes depositors to begin to withdraw their funds from banks,the country experiences a(n)
A)banking crisis.
B)financial recovery.
C)reduction of the adverse selection and moral hazard problems.
D)increase in information available to investors.

Question

Quizplus · Accepted Answer

The withdrawal of funds from banks due to uncertainty about their health is a classic symptom of a banking crisis. This can lead to a chain reaction of bank failures, which can have serious consequences for the economy as a whole.

If Uncertainty About Banks' Health Causes Depositors to Begin to Withdraw