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.

Question

Quizplus · Accepted Answer

Tobin's q theory posits that monetary policy affects investment spending by influencing stock prices, which in turn affect the market value of firms relative to the replacement cost of their assets.

Tobin's Q Theory Suggests That Monetary Policy May Affect Investment