Question 1

If the market value of a firm is $6 billion and the replacement cost of installed capital is equal to $3 billion,then Tobin's q is equal to ________.

Accepted Answer

A)  9
B)  3
C)  18
D)  2E) B) and C)
F) A) and B)

Question 2

Holdings of partially finished components involve inventories of ________.

Accepted Answer

A)  Tobin's q
B)  work in process
C)  production smoothing
D)  stock-out componentsE) All of the above
F) A) and C)

Question 3

Except during the Great Depression,net investment has always been ________.

Accepted Answer

A)  equal to depreciation
B)  equal to zero
C)  positive
D)  negativeE) C) and D)
F) A) and B)

Question 4

Tobin's q theory adds to neoclassical theory because it ________.

Accepted Answer

A)  illustrates the important relationship between tax rates and the incentive to labor
B)  emphasizes the role played by asset price fluctuations on investment spending
C)  highlights the impact of a tax increase on business investment
D)  underlines the relationship between financial innovation and the financial crisis of 2007-2009E) All of the above
F) None of the above

Question 5

Desired Level of the Capital Stock 
-Consider the two graphs above.Suppose that technological progress is expected to reduce the future cost of capital goods.This would ________ the desired level of the capital stock,as depicted in graph ________.

Accepted Answer

A)  increase;B
B)  increase;A
C)  decrease;B
D)  decrease;AE) B) and C)
F) C) and D)

Question 6

Which of the following is a component part of investment spending?

Accepted Answer

A)  the purchase of a new microwave by a fast food restaurant
B)  the purchase of 500 shares of corporate stock
C)  the sale of 500 shares of corporate stock
D)  all of the aboveE) All of the above
F) None of the above

Question 7

Desired Level of the Capital Stock 
-Consider the two graphs above.Suppose that allowable deductions from taxable business income are increased.This would ________ the desired level of the capital stock,as depicted in graph ________.

Accepted Answer

A)  increase;B
B)  increase;A
C)  decrease;B
D)  decrease;AE) None of the above
F) A) and D)

Question 8

The federal government of the United States has ________.

Accepted Answer

A)  proven itself unable to significantly influence U.S.home ownership
B)  has been able to increase the volume of home ownership in the U.S.
C)  proven itself able to effectively control monetary policy
D)  has been unable to increase the volume of government spending since WWIIE) C) and D)
F) None of the above

Question 9

Investment spending is procyclical.In the short run,are changes in investment affected more by changes in the expected marginal product of capital,or by changes in the user cost of capital?

Accepted Answer

More by changes in the expected marginal...

Question 10

Use Tobin's q theory and the neoclassical theory of investment to explain why investment rises so rapidly once the economy has passed the trough of a business cycle.

Accepted Answer

As an economy enters the recovery phase ...

Question 11

Investment spending is a potent force in the macroeconomy,because ________.

Accepted Answer

A)  it is subject to large fluctuations
B)  it is larger than other spending categories
C)  it is the focus of macroeconomic policies
D)  it expresses entrepreneurial talentE) None of the above
F) A) and B)

Question 12

A decline in real mortgage rates will lead,other things the same,to ________.

Accepted Answer

A)  lower demand for housing
B)  tighter financing constraints
C)  an increase in residential investment
D)  a lower relative price of housingE) A) and D)
F) A) and C)

Question 13

Figure 19.1 
-Figure 19.1 displays changes in the size of private inventories.Based on the figure,in which month is the size of private inventories likely to have been lowest?

Accepted Answer

A)  September 2010
B)  September 2011
C)  September 2009
D)  March 2010E) A) and D)
F) B) and C)

Question 14

Desired Level of the Capital Stock 
-Consider the two graphs above.Suppose that firms are able to use inventories as collateral for low-interest loans.This would ________ the desired level of inventories,as depicted in graph ________.

Accepted Answer

A)  increase;B
B)  increase;A
C)  decrease;B
D)  decrease;AE) A) and D)
F) All of the above

Exam 19: Investment

If the market value of a firm is $6 billion and the replacement cost of installed capital is equal to $3 billion,then Tobin's q is equal to ________.

Correct Answer
verified

Investment spending is procyclical.In the short run,are changes in investment affected more by changes in the expected marginal product of capital,or by changes in the user cost of capital?

Correct Answer
verified
More by changes in the expected marginal...
View Answer

Desired Level of the Capital Stock -Consider the two graphs above.Suppose that technological progress is expected to reduce the future cost of capital goods.This would the desired level of the capital stock,as depicted in graph .

Correct Answer
verified

Except during the Great Depression,net investment has always been ________.

Correct Answer
verified

Tobin's q theory adds to neoclassical theory because it ________.

Correct Answer
verified

Figure 19.1 -Figure 19.1 displays changes in the size of private inventories.Based on the figure,in which month is the size of private inventories likely to have been lowest?

Correct Answer
verified

Which of the following is a component part of investment spending?

Correct Answer
verified

The federal government of the United States has ________.

Correct Answer
verified

Use Tobin's q theory and the neoclassical theory of investment to explain why investment rises so rapidly once the economy has passed the trough of a business cycle.

Correct Answer
verified
As an economy enters the recovery phase ...
View Answer

Investment spending is a potent force in the macroeconomy,because ________.

Correct Answer
verified

Desired Level of the Capital Stock -Consider the two graphs above.Suppose that allowable deductions from taxable business income are increased.This would the desired level of the capital stock,as depicted in graph .

Correct Answer
verified

Desired Level of the Capital Stock -Consider the two graphs above.Suppose that firms are able to use inventories as collateral for low-interest loans.This would the desired level of inventories,as depicted in graph .

Correct Answer
verified

Holdings of partially finished components involve inventories of ________.

Correct Answer
verified

A decline in real mortgage rates will lead,other things the same,to ________.

Correct Answer
verified

Exam 19: Investment

If the market value of a firm is $6 billion and the replacement cost of installed capital is equal to $3 billion,then Tobin's q is equal to ________.

Correct AnswerverifiedShow Answer

Investment spending is procyclical.In the short run,are changes in investment affected more by changes in the expected marginal product of capital,or by changes in the user cost of capital?

Correct AnswerverifiedMore by changes in the expected marginal...View AnswerShow Answer

Desired Level of the Capital Stock -Consider the two graphs above.Suppose that technological progress is expected to reduce the future cost of capital goods.This would ________ the desired level of the capital stock,as depicted in graph ________.

Correct AnswerverifiedShow Answer

Except during the Great Depression,net investment has always been ________.

Correct AnswerverifiedShow Answer

Tobin's q theory adds to neoclassical theory because it ________.

Correct AnswerverifiedShow Answer

Figure 19.1 -Figure 19.1 displays changes in the size of private inventories.Based on the figure,in which month is the size of private inventories likely to have been lowest?

Correct AnswerverifiedShow Answer

Which of the following is a component part of investment spending?

Correct AnswerverifiedShow Answer

The federal government of the United States has ________.

Correct AnswerverifiedShow Answer

Use Tobin's q theory and the neoclassical theory of investment to explain why investment rises so rapidly once the economy has passed the trough of a business cycle.

Correct AnswerverifiedAs an economy enters the recovery phase ...View AnswerShow Answer

Investment spending is a potent force in the macroeconomy,because ________.

Correct AnswerverifiedShow Answer

Desired Level of the Capital Stock -Consider the two graphs above.Suppose that allowable deductions from taxable business income are increased.This would ________ the desired level of the capital stock,as depicted in graph ________.

Correct AnswerverifiedShow Answer

Desired Level of the Capital Stock -Consider the two graphs above.Suppose that firms are able to use inventories as collateral for low-interest loans.This would ________ the desired level of inventories,as depicted in graph ________.

Correct AnswerverifiedShow Answer

Holdings of partially finished components involve inventories of ________.

Correct AnswerverifiedShow Answer

A decline in real mortgage rates will lead,other things the same,to ________.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified
More by changes in the expected marginal...
View Answer

Desired Level of the Capital Stock -Consider the two graphs above.Suppose that technological progress is expected to reduce the future cost of capital goods.This would the desired level of the capital stock,as depicted in graph .

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
As an economy enters the recovery phase ...
View Answer

Correct Answer
verified

Desired Level of the Capital Stock -Consider the two graphs above.Suppose that allowable deductions from taxable business income are increased.This would the desired level of the capital stock,as depicted in graph .

Correct Answer
verified

Desired Level of the Capital Stock -Consider the two graphs above.Suppose that firms are able to use inventories as collateral for low-interest loans.This would the desired level of inventories,as depicted in graph .

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified