As the interest sensitivity of investment demand increases, the size of the crowding- out effect decreases.

Name: As the interest sensitivity of investment demand increases, the size of the crowding- out effect decreases.
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As the interest sensitivity of investment demand increases, the size of the crowding-out effect actually increases because a higher sensitivity means that even small increases in interest rates (due to government borrowing) will lead to significant reductions in investment.

As the Interest Sensitivity of Investment Demand Increases, the Size