The crowding-out effect suggests that:()
A. expansionary fiscal policy leads to inflation.
B. restrictive fiscal policy is an effective weapon against inflation.
C. greater government deficits will drive up interest rates, thereby reducing private investment.
参考答案:C
解析:
The crowding out effect refers to a reduction in private borrowing and spending as a result of higher interest rates generated by budget deficits that are financed by borrowing in the private loanable funds market.