Here Are Three Things You Could Do If You Do

question 13

Multiple Choice

Here are three things you could do if you do not attend your neighbor's barbecue: watch television with some friends (you value this at $17) ,read a good novel (you value this at $14) ,or go in to work (you could earn $16 during the barbecue) .The opportunity cost of going to your neighbor's barbecue is

• A) $16, because this is the only alternative of the three where you actually receive a monetary payment.
• B) $14, because this is the lowest valued alternative forfeited.
• C) $17, because this is the highest valued alternative forfeited.
• D) $47, because this is the total dollar sum of the alternatives forfeited.

---

Definitions:

Open Market Operations

The buying and selling of government securities by a central bank to control the money supply and interest rates in the economy.

Federal Reserve

The central banking system of the United States, responsible for conducting national monetary policy and overseeing financial institutions.

Excess Reserves

The difference between actual reserves and required reserves.

Commercial Banks

Financial institutions that accept deposits, offer checking account services, and make various loans to businesses and individuals.