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Amortization in finance refers specifically to the process of gradually reducing a debt through a series of scheduled payments over a set period. This process typically involves making equal payments that cover both principal and interest, leading to the eventual full repayment of the loan by the end of the term.

This method is often used for long-term loans, such as mortgages or car loans, where the borrower pays down the balance over time, leading to a decrease in the outstanding debt. Each payment reduces the principal amount owed, which in turn lowers the interest charged on the loan for subsequent periods, hence facilitating a structured and manageable repayment plan for borrowers.

The other options touch on different financial concepts but do not accurately describe amortization. The complete payment of debt in one installment refers more to lump-sum payments, while a gradual increase in debt aligns more with accruing interest or borrowing additional funds. Finally, a tax strategy for minimizing liabilities does not relate to the concept of amortization at all, as it pertains to tax planning rather than debt repayment.