Author Question: Tobin's q theory adds to neoclassical theory because it ________. A) illustrates the important ... (Read 24 times)

folubunmi · **on:** Jun 30, 2018

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

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 2007-2009

Question 2

The IS curve is Y = 20 - 1.5r, and the aggregate demand curve is Y = 15.5 - 0.3. When the interest rate is 7 percent, the inflation rate is ________ percent.

A) 14.6
B) 9.5
C) 3.6
D) 20
E) none of the above