Tobin's Q Theory Suggests That Monetary Policy May Affect Investment

question 47

Multiple Choice

Tobin's q theory suggests that monetary policy may affect investment spending through its impact on

• A)stock prices.
• B)interest rates.
• C)bond prices.
• D)cash flow.

---

Definitions:

Arm's Length Transaction

A transaction where the buyers and sellers of a product act independently and have no relationship to each other, ensuring that the deal is conducted fairly and without any conflict of interest.

Special Duties

Obligations that are unique to certain relationships or positions, often implying a higher standard of conduct.

Self-Interest

In economics and psychology, it refers to actions that are primarily intended to benefit oneself.

Nonfraudulent Representation

Any statement or declaration that is truthful and not intended to deceive or mislead.