I think if the needle is higher it won't let in as much fuel as it should with each impulse signal from the crankcase. You would probably have symptoms like not being able to reach full rpm because of fuel starvation. If the needle was too low it may not close the fuel flow off because the needle could not fully seat. That may cause the fuel to go back out the inlet fuel line instead of into the carb circuits so in effect there would be no fuel pumping action. I always used to set the inlet lever so it was bent a very tiny bit towards the fuel pump side so that if it did bend back a bit it would be going towards the recommended setting.
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