According to Tobin's Q Theory, When Equity Prices Are High

question 39

Multiple Choice

According to Tobin's q theory, when equity prices are high the market price of existing capital is ________ relative to new capital, so expenditure on fixed investment is ________.

• A) cheap; low
• B) expensive; low
• C) cheap; high
• D) expensive; high

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Definitions:

Consumers' Role

The influence or part played by consumers in the market, including their decisions on purchasing goods and services.

Production Possibilities Curve

A graphical representation that shows the maximum quantity of goods and services that can be produced within a given time period and set of resources, assuming full and efficient use of those resources.

Terrorist Attacks

Violent actions perpetrated by individuals or groups with the aim of instilling fear or achieving political, religious, or ideological goals.

Homeland Security

Homeland security refers to the concerted national effort to prevent terrorist attacks within a country, reduce a country's vulnerability to terrorism, and minimize the damage from attacks that do occur.