a) Identify which one of the following securities has the highest nominal annual return at issuance. Use the key determinants of Nominal Interest Rate to briefly explain why. [2 marks]

20-year bonds issued by the Australian federal government.

30-year corporate bonds issued by the American technology company, Apple Inc

b) Monetary Policy (MP) is one of the key pillars of macroeconomic policy.

• i) Which monetary authority is responsible for the MP in Australia? [1 mark]

  ii) Briefly explain how the monetary authority could use the MP to affect the macro economy which is overheating (Include in your answer the definition of MP, inflation target of the MP, the expected effect of any suggested change in cash rate on consumption, investment and the likely change to net export). [5 marks]