On page 139 of the CFA III curriculum volume 1, under “THE MONETARY AND FISCAL POLICY MIX AND THE SHAPE OF THE YIELD CURVE AND THE BUSINESS CYCLE”, it was mentioned that “loose fiscal policies (large deficits) increase the level of real interest rates because the domestic private sector must be induced to save more/investing less and/or additional capital must be attracted from abroad.”
However, I thought loss (expansionary) fiscal policy means more government spending and cut on taxes, which motivate people to consume and invest?
Thank you.