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Q.

Banks will ____ to give money to the depositors if all ask for money at the same time.

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Detailed Solution

Banks will not be able to give money to the depositors if all ask for money at the same time.
There would be a severe cash crisis in the banks, as they would run out of money if all depositors went to the banks and withdrew their money at once. They won't be able to lend money to different businesses and markets. There won't be any daily activity in banks, so there won't be any foot traffic. As a result, no loans can be provided as crop loans, which will impact the agricultural output for the upcoming season. The ratio of bank cash reserves will also fall sharply. The financial system will completely collapse as a result.

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