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Following a period in which the Reserve Bank of Australia has decreased the cash target rate to the level of 2.5% per annum, the Australian

Following a period in which the Reserve Bank of Australia has decreased the cash target rate to the level of 2.5% per annum, the Australian yield curve is now upward sloping. Explain the shape of the yield curve using the expectations theory, and the market segmentation theory, remembering to contrast the underlying assumptions of the two theories.

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