c. Expectations of a future policy reversal weakeThe crowding-out effect is the multiple choice 4 reduction in investment spending caused by the increase in interest rates, arising from an increase in government spending. increase in investment spending caused by the decrease in interest rates, arising from an increase in government spending. increase in investment spending caused by the increase in interest rates, arising from an increase in government spending. reduction in investment spending caused by the decrease in interest rates, arising from an increase in government spending.n fiscal policy because multiple choice 3 consumers may hesitate to increase their spending because they believe that tax rates will rise again. interest rates will usually rise, offsetting any change in fiscal policy. tax cuts are combined with spending increases so there is no real effect. people tend to make decisions based on pre-tax income