If the crowding-out effect is strong, how will the potency of discretionary fiscal policy be affected?

Question

Quizplus · Accepted Answer

If the crowding-out effect is strong, it means that an increase in government spending leads to a decrease in private sector investment. This implies that discretionary fiscal policy will be less effective because any increase in government spending will not result in an equivalent increase in overall spending in the economy. As a result, the potency of fiscal policy will be reduced.

If the Crowding-Out Effect Is Strong, How Will the Potency