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What Is the "Crowding-Out" Effect? How Does the Crowding-Out Effect

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What is the "crowding-out" effect? How does the crowding-out effect influence the potency of fiscal policy?


Definitions:

Cognitive Consistency Theories

Theories in psychology that suggest individuals are motivated to maintain consistency among their cognitions (beliefs, attitudes, and perceptions).

Inconsistencies

Situations or statements that are not in agreement, lack compatibility, or are full of contradictions.

Individuals

Distinct or separate entities, often referred to in the context of singular human beings.

Cognitive Dissonance

The psychological discomfort experienced by an individual who holds two or more contradictory beliefs, ideas, or values at the same time.

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