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Crowding out leads to decreased consumption, and generally occurs because of increased government spending. With a fiscal policy in play, the government puts more money into the money flow/economy, which people then save instead of spending it. Since people are saving money and not spending, consumption will decrease.

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Economist would most likely agree on that there is some crowding out when the government is borrowing money to fund additional spending, but there is a great deal of contention as to the extent to which investment funding is affected.

From a Traditional Keynesians' point of view, they largely disregard any possible crowding out effects, operating as they were under the assumption that investment levels were largely unaffected by inerest rate.

From a Modern day Keynesians' point of veiw, they accept a degree of crowding out, but still regard investment demand as relatively inelastic.

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