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Basic Question 1 of 11

Suppose that when government spending increases, firms decrease their levels of investment spending. This is an example of ______.

A. crowding out
B. forcing out
C. jamming out
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User Contributed Comments 5

User Comment
danlan Know what's crowding out and crowding in.
moma20 crowding out means decrease
crowding in means increase
stevelaz In out, in out, shake it all about, you do the okey cokey and ..........
DariSH It's better to memorize it like this:
Recall: I=PS+T-G;
Then just think: when G is bigger than T, it decreases I by eating a part of PS. This is a crowding out effect.
chcarnes Pretty sure it's jamming out
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I passed! I did not get a chance to tell you before the exam - but your site was excellent. I will definitely take it next year for Level II.
Tamara Schultz

Tamara Schultz

Learning Outcome Statements

explain the implementation of fiscal policy and difficulties of implementation as well as whether a fiscal policy is expansionary or contractionary

CFA® 2026 Level I Curriculum, Volume 1, Module 3.