What impact does a smaller crowding-out effect have on the magnitude of a given fiscal policy's effect on AD and net exports?

Question

Quizplus · Accepted Answer

A smaller crowding-out effect means that fiscal policy is more effective in increasing aggregate demand (AD) because less private investment is displaced. However, it can lead to a decrease in net exports if increased AD leads to higher interest rates, appreciating the currency and making exports more expensive.

What Impact Does a Smaller Crowding-Out Effect Have on the Magnitude