Fiscal Policy Is Unnecessary Since Aggregate Demand Is Always Compatible

question 115

True/False

Fiscal policy is unnecessary since aggregate demand is always compatible with economic stability.

---

Definitions:

Retention Ratio

The share of net income not disbursed as dividends to shareholders but rather reserved by the business for various uses.

Dividend Payout Ratio

The fraction of net income a firm pays to its shareholders in the form of dividends, compared to the portion reinvested in the business.

Percentage of Sales Approach

A method used in financial forecasting to estimate various elements of a financial statement as a percentage of forecasted sales.

Profit Margin

A financial metric that measures the amount of net income generated as a percentage of revenue, indicating how effectively a company can convert sales into net profits.