A nationwide panic ensued in 1933 when bank customers descended upon banks to withdraw their assets, only to be turned away because of a shortage of cash and credit.

ABC Bank is one of the banks who suffers financial crisis and suddenly savers run to the bank and convert their deposits in cash.

1- With this situation, why depositors acted as such? What will be the aftermath of the massive withdrawals from the bank? (10 marks)

2- How should the government (fiscal policy) intervene in order to avoid bank run? (10 marks)