Tobin's theory suggests that firms will find it profitable to invest when the value of Tobin's is:
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0 marksMacroeconomicsConsumption and investmentTobin's q and the user cost of capitalEasyabout 1 min
DSE 2016 Question 36: Consumption and investment
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Tobin's q theory suggests that firms will find it profitable to invest when the value of Tobin's q is: (A) greater than zero (B) less than zero (C) greater than unity (D) less than unity
Consumption and investment has come up 74 times in 7 exams since 2005.
What this question tests
This question is on Tobin's q and the user cost of capital, part of Consumption and investment in Macroeconomics.
Modern theories of investment based on the market value of capital and its rental cost.
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Question from the DSE 2016 paper. Solutions are TestStop's own. Not affiliated with or endorsed by any examination authority.