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1) State the Pure (Unbiased) Expectations Theory 2) How is the liquidity preference theory supposed to address the shortcomings of the pure expectations theory? 3)

1) State the Pure (Unbiased) Expectations Theory

2) How is the liquidity preference theory supposed to address the shortcomings of the pure expectations theory?

3) Briefly discuss how the liquidity preference theory explains the shape of the yield curve.

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