单选题 The crowding-out model suggests that the stimulus effect of increased government expenditures will be modified by changes in real interest rates and the flow of foreign financial capital, be cause real interest rates will:

A. rise and inflows of financial capital from outside the country will increase.
B. rise and inflows of financial capital from outside the country will decrease.
C. fall and inflows of financial capital from outside the country will increase.

【正确答案】 A

【答案解析】The increase in government borrowing to finance the higher expenditures will put upward pressure on real interest rates. This in turn will slow private investment and attract an inflow of capital from abroad.