Final answer:
A scenario where people queue to cash out their deposits due to concerns about a bank's liquidity is known as a bank run. It's a situation where fears about a bank's solvency lead many depositors to withdraw their money all at once, potentially causing the bank's failure.
Step-by-step explanation:
If people are standing in line to get their deposits cashed from a bank because they fear the bank has a liquidity problem, this is an example of b. A bank run. A bank run occurs when depositors race to a bank to withdraw their deposits for fear that the bank may fail and their money would be lost. These situations may arise due to rumors or actual financial difficulties at the bank, and the resulting rush to withdraw funds can exacerbate the bank's liquidity issues. In extreme cases, if many depositors withdraw their funds simultaneously, it can cause the bank to fail.
Historically, bank runs have been significant events that have led to broader financial crises. During the Great Depression, for instance, bank runs were common as people feared their deposits were not safe. The famous movie It's a Wonderful Life even includes a scene that depicts a bank run. To address the panic and maintain stability in the banking system, the U.S. implemented deposit insurance so that depositors' savings would be guaranteed, thereby preventing bank runs based on unfounded fears.