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3. Bank Run a. Fill in the blanks: During a bank run, depositors decide to hold i. (more/less) cash and banks decide to hold ii.

3. Bank Run

a. Fill in the blanks: During a bank run, depositors decide to hold i. (more/less) cash and banks decide to hold ii. (more/less) reserves relative to deposits. Briefly explain your choice.

b. Do you expect the interest rate to change as a result? Why or why not?

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