James Tobin Reasoned That

Multiple Choice

James Tobin reasoned that:

A) the stock market is a "random walk."
B) if the stock market values capital at less than its replacement cost, the stock market will go up.
C) if the stock market values capital at less than its replacement cost, the stock market will go down.
D) if the stock market values capital at less than its replacement cost, the firm's managers will not replace capital as it wears out.