The opportunity cost of borrowing funds to finance government deficits is

A) greatest when the economy is doing well.
B) greatest when the economy is in a recession.
C) zero.
D) the same regardless of the state of the economy.

The opportunity cost of borrowing funds to finance government deficits is greatest when the economy is doing well because in a strong economy, borrowing competes with private investment, potentially leading to higher interest rates and crowding out private investment.