Outer loop runs $\log_2 n$ times.
For $i = n$, inner loop runs $n$ times.
For $i = n/2$, inner loop runs $n/2$ times.
$\vdots$
For $i = 1$, inner loop runs $1$ time.
So, overall, the inner loop runs for
$T(n) = 1+2+4+8+ \cdots + n$ times.
This is a Geometric Progression, which can be written as:
$T(n) = 1+2+4+8+\cdots+n = 2n-1 = \mathcal{O}(n)$
Hence, option C is correct.