According to Tobin’s q theory of investment,
a) when the stock market undervalues a company, the company should invest in capital expansion
b) when a firm’s bond prices rise, the firm should sell off existing assets
c) borrowing funds by issuing bonds is always a less expensive way than issuing stock to raise funds for investment
d) a firm should buy capital when its stock market valuation exceeds the replacement cost of capital
e) firms should invest at a constant rate each month, a practice known as dollar-cost averaging
d) a firm should buy capital when its stock market valuation exceeds the replacement cost of capital
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An increase in oil prices will
A) shift the short-run aggregate supply curve up and to the left. B) shift the short-run aggregate supply curve down and to the right. C) cause a movement along the short-run aggregate supply curve. D) not affect the short-run aggregate supply curve.
Which of the following does NOT describe why Britain adopted the pegged system (the Exchange Rate Mechanism [ERM]) in 1990?
A) There were benefits to trade and other forms of cross-border exchange. B) Britain wanted to hold onto the pound as its currency. C) It was a member of the European Union and fixed rates were good for trade with other members. D) It hoped to participate in the new common currency when it was launched.
Suppose Jordan and Lee are trying to decide what to do on a Friday. Jordan would prefer to see a comedy while Lee would prefer to see a documentary. One documentary and one comedy are showing at the local cinema. The payoffs they receive from seeing the films either together or separately are shown in the payoff matrix below. Both Jordan and Lee know the information contained in the payoff matrix. They purchase their tickets simultaneously, ignorant of the other's choice.
Which of the following statements is true?
A. The lower-left cell is the only Nash equilibrium. B. Both the lower-left and upper right cells are Nash equilibria. C. The upper-right cell is the only Nash equilibrium. D. Both the upper-left and lower-right cells are Nash equilibria.
As a result of "Check 21-The Check Clearing for the 21st Century Act":
A. banks no longer have to ship paper checks to complete the process of check clearing. B. the Federal Reserve is no longer involved in the check-clearing process. C. people can write checks and plan on having a couple of days to make a deposit to cover the check amount. D. canceled checks can no longer be used as proof of payment.