EBK THE ECONOMICS OF MONEY, BANKING AND
EBK THE ECONOMICS OF MONEY, BANKING AND
5th Edition
ISBN: 9780134734545
Author: Mishkin
Publisher: YUZU
Question
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Chapter 25, Problem 12Q
To determine

The effect of the policy of Federal Reserve Bank on the economy as it relates to the Tobin Q transmission mechanism

Concept introduction:

Tobin Q - This ratio has been devised by James Tobin of Yale University, Nobel laureate in economics. It measures the firm assets in relation to the firm’s market value.

Formula: Tobin Q = total market value / total asset value of firm

The Tobin's Q  ratio is a measure of firm assets in relation to a firm's market value. The formula for Tobin’s Q  is: Tobin's Q  = Total Market Value of Firm / Total Asset Value of Firm.

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