A banking panic is an episode in which:
A. depositors, afraid of increasing interest rates, attempt to engage in discount-window borrowing at the Federal Reserve.
B. depositors, spurred by news or rumors of possible bankruptcy of one bank, rush to withdraw deposits from the banking system.
C. commercial banks, concerned about high interest rates, rush to borrow at the Federal Reserve discount rate.
D. commercial banks, fearing Federal Reserve sanctions, unwillingly participate in open-market operations.
Answer: B
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