A ____________ refers to a situation in which a loss of confidence in the banking system leads to a run on banks,as individuals and companies withdraw their deposits.
A) banking crisis
B) currency crisis
C) federal reserve crisis
D) monetary crisis
E) debt crisis

Question

Quizplus · Accepted Answer

A banking crisis is a situation where depositors lose confidence in the banking system and start withdrawing their deposits, causing a run on banks. This leads to a liquidity crunch, forcing banks to sell their assets at a lower price, which further worsens the crisis. Other options such as currency crisis, federal reserve crisis, monetary crisis, and debt crisis may also affect the banking system, but they may not necessarily lead to a run on banks.

A ____________ Refers to a Situation in Which a Loss