The Tax Reductions, Increases in Defense Expenditures, and Budget Deficits

question 146

Multiple Choice

The tax reductions, increases in defense expenditures, and budget deficits of the 1980s are characteristic of

• A) expansionary fiscal policy.
• B) the crowding-out effect.
• C) restrictive fiscal policy.
• D) the paradox of thrift.

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Definitions:

Bank Loan Payable

A liability representing the amount of borrowed funds from a bank that the borrower is legally required to repay in the future.

Interest Expense

The cost incurred by an entity for borrowed funds; it is the price paid for the use of borrowed money or money earned from deposited funds.

Interest Payable

Refers to the amount of interest that has been incurred on borrowed funds but has not yet been paid out to the lender as of the reporting date.