Rob Redbird is interested in attending a concert next weekend. Unfortunately, he is scheduled to work. If he finds a substitute for his shift so he can attend the concert, what kind of cost is he incurring?

Under these assumptions, the $500,000 injection into the money supply results in overall increase of 5,000,000 in checkable deposits.

Explanation:

Multiplier × Money supply

= 1 / 0.10 × 500,000

⇒ 5,000,000

First Main Street Bank

Increase in Checkable Deposits: 500,000

Increase in Required Reserves: 50,000

Increase in Loans: 450,000

Second Republic Bank

Increase in Checkable Deposits: 450,000

Increase in Required Reserves: 45,000

Increase in Loans: 405,000

Third Fidelity Bank

Increase in Checkable Deposits: 405,000

Increase in Required Reserves: 40,500

Increase in Loans: 364,500