The lake rose up like a mountain then totally disappeared leaving only a swamp of red mud. What do you think happened to the lake earthquake by Ruskin bond

The lake was filled with water due to earthquake.

Explanation:

There is less amount of water flowing in the lake but due to earthquake the level of water rises. It is because the dam which is present at the end of lake was severely damaged and the wooden bridge was broken and all the water which is stored in the dam flow through the lake in the form of flood which takes everything with itself that comes in its way. After the flood is over only mud was left and no standing house was left.

Gregor is calm.

Explanation:

According to the excerpt,

"Gregor then turned to look out the window at the dull weather. Drops of rain could be heard hitting the pane, which made him feel quite sad. 'How about if I sleep a little bit longer and forget all this nonsense', he thought"

Gregor didn't really lose his mind nor acted in a really emotional way when he realized what he was. In fact, he acted as if it was a dream and tried to sleep as if it was a bad dream from which he wanted to wake up later on. It wasn't until Gregor spoke that he started panicking:

"Gregor was shocked when he heard his own voice answering, it could hardly be recognized as the voice he had had before."