A bankpanic is a sudden, drastic,andwidespread economic collapse. All at once, many people become convinced their money or investments are at risk and rush to thebankinginstitutions holding their assets.

a)How would long-term illiquid assets and short-term liquid liabilities contribute to conditions for a bankpanic?

b)Describe how a bankpanic can lead to loss of income and employment in various sectors of the economy.