单选题

The crowding-out model implies that a（）。

A、 budget deficit will increase the real interest rate and thereby retard private investment.
B、 budget surplus will retard aggregate demand and trigger an economic downturn.
C、 budget surplus will be a highly effective weapon against inflation.

【正确答案】 A

【答案解析】

Increased budget deficits will increase the demand for loanable funds and lead to higher interest rates and thus lower private investment. Crowding-out implies that an increase in government spending will choke off private investment and reduce the intended impact of fiscal policy changes on aggregate demand.