Single Answer MCQ
Q-00045414
What might happen if all depositors withdraw their funds simultaneously?
1
The bank will have enough cash to fulfill demands easily.
2
The bank may face a liquidity crisis.
3
Banks are always prepared for such demands.
4
Depositors would not be allowed to withdraw their funds.
Answer and Solution
Answer
B. The bank may face a liquidity crisis.
Solution:
If all depositors attempted to withdraw their funds at once, the bank could face a liquidity crisis because it only keeps a small percentage of deposits as cash.
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