Final answer:
The statement about withdrawals is False. A withdrawal is when depositors take out money from their accounts, not when an institution decides not to extend credit. The Panic of 1819 decreased trust in the Second Bank of the United States.
Step-by-step explanation:
The statement 'A withdrawal is when a financial institution decides not to extend credit to the borrower?' is False. A withdrawal refers to the action of depositors taking their money out of their bank accounts. The decision of a financial institution not to extend credit is not referred to as a withdrawal; that would be a denial of credit or a loan rejection. When fear and uncertainty suggest that a bank might fail, depositors may rush to withdraw their money, potentially leading to a bank run if many do so simultaneously. This was especially true during the Panic of 1819 and the early 20th century, where such events decreased the depositors' trust in banks.
Regarding the Panic of 1819, the correct answer to the statement 'The Panic of 1819 increased the American people's faith in the Second Bank of the United States.' is False. The Panic of 1819 caused distrust in the financial system and the Second Bank of the United States because of economic distress and instability. The Panic was a result of a variety of factors, including the asset-liability time mismatch where banks had difficulty meeting withdrawal demands due to their long-term assets and short-term liabilities.