单选题 The term "crowding out" implies that: A. Fed purchases of securities cause inflation in the long run. B. A budget surplus will be a highly effective weapon against inflation. C. budget deficits will increase real interest rates and thereby retard business investment.

【正确答案】 C

【答案解析】Under this theory, increased government borrowing increases interest rates which causes businesses to undertake less investment as some projects no longer have positive NPVs.