A bank run is defined as:

A bank run refers to a situation where a substantial number of depositors rush to withdraw their funds from a bank simultaneously, driven by fears that the bank may become insolvent or fail. This phenomenon can create a self-fulfilling prophecy, as the act of many people attempting to withdraw their money can lead to actual liquidity issues for the bank.

During a bank run, the panic among depositors can cause a bank to experience significant cash shortages, as banks typically do not keep enough physical cash on hand to accommodate all withdrawal requests at once. This situation often leads to wider financial instability, impacting the banking system as a whole.

In contrast, the other options describe different situations that do not encapsulate the essence of a bank run. For example, a government mandate limiting currency withdrawal refers to regulatory actions that may restrict access to funds, whereas investors withdrawing from bank investments might pertain more to investment accounts rather than direct deposits. Lastly, a slow decline in bank deposits over time does not involve the urgent and collective action that characterizes a bank run, but rather signifies a gradual trend influenced by factors such as changing consumer preferences or shifts in economic conditions.