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.

Question

Quizplus · Accepted Answer

The tax reductions and increases in defense expenditures in the 1980s were part of expansionary fiscal policy, which seeks to stimulate economic growth through government spending and tax cuts. However, these policies also led to significant budget deficits.

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