1) Tobin"s q is defined as the market value of firms ________ the replacement cost of capital.

A) times

B) minus

C) plus

D) divided by

2) 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.

3) In the late 1990s, the stock market bubble ________ the value of Tobin"s q, and caused ________ in business equipment.

A) increased; underinvestment

B) increased; overinvestment

C) decreased; underinvestment

D) decreased; overinvestment

4) During the Great Depression, Tobin"s q

A) rose dramatically, as did real interest rates.

B) fell to unprecedentedly low levels.

C) stayed fairly constant, in contrast to most other economic measures.

D) rose only slightly, in spite of Hoover"s attempts to prop it up.