Which of the Following Statements Is Correct

question 60

Multiple Choice

Which of the following statements is correct?

• A) Federal deficits were larger in the early 2000s than in the late 2000s.
• B) Deep tax cuts always expand tax revenues and reduce the public debt.
• C) The public debt has usually declined during wartime.
• D) There is a tendency for the public debt to grow during recessions.

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Definitions:

Loan Covenants

Agreements between a borrower and a lender that the borrower must comply with to remain in good standing.

Principal and Interest

The original amount of a loan (principal) combined with the cost of borrowing that money (interest).

Financial Covenants

Agreements between a borrower and lender setting specific financial ratios or milestones the borrower must maintain.

Minimum Financial Tests

Financial benchmarks or ratios a company must achieve or maintain to comply with certain agreements, often related to debt covenants.