Answer: C
Option A is INCORRECT. Virtual Private Cloud (VPC) is a virtual network that lets us launch AWS resources in the defined virtual network.
Option B is INCORRECT. Configure transitive VPC peering is invalid as this is not supported in AWS.
Option C is CORRECT. NACLs can be configured to enhance the security at the subnet level.
Option D is INCORRECT. Security Group acts as a virtual firewall by controlling the traffic both inbound and outbound. Security group acts at the instance level.
Reference:
https://docs.aws.amazon.com/vpc/latest/userguide/what-is-amazon-vpc.html
https://docs.aws.amazon.com/vpc/latest/peering/invalid-peering-configurations.html
https://docs.aws.amazon.com/vpc/latest/userguide/vpc-network-acls.html
https://docs.aws.amazon.com/vpc/latest/userguide/VPC_SecurityGroups.html