According to Tobin's Q Theory,________ Policy Can Affect ________ Spending

question 39

Multiple Choice

According to Tobin's q theory,________ policy can affect ________ spending through its effect on the prices of common stock.

• A)fiscal;consumption
• B)fiscal;investment
• C)monetary;consumption
• D)monetary;investment

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Definitions:

Call Provision

A feature of a bond or other fixed-income security that allows the issuer to repay the principal before the maturity date, typically at a premium.

Bond Rating

A measure of the likelihood of default on payment of interest or principal. Ratings are prepared by rating agencies. The best known agencies are Moody’s and Standard and Poor’s.

Restrictive Covenants

Provisions in a contract or loan agreement that limit the borrower's actions, intended to protect the lender by maintaining the borrower's creditworthiness.