Obtain the following macroeconomic data for Australia for the period 2004-2021: (a) the yield for Commonwealth Government securities, (b) the budget balance, (c) the cash rate, and (4) 90-day and 180-day rates.

1. Examine the fiscal position (i.e. movement of the budget balance) of the Australian Federal Government for the period 2004-2021. How has the budget balance changed since the COVID-19 pandemic? Briefly predict how you expect the budget balance to move over the next three years.

2. Graph the current Australian yield curve for Commonwealth Government Securities (CGSs). At a minimum you must include the target cash rate, 90-day and 180-day rates, and the 2, 3, 5, and 10-year rates. Explain the shape of the yield curve. Is your explanation consistent with the Expectations theory or the Segmented Market theory of the yield curve, or nether?

3. Examine the relationship between the fiscal position identified in (1) and the yield curve. Does the fiscal balance appear to influence the yield curve, especially since the COVID-19 pandemic?

4. Given your insights from (1) (3), recommend to the Australian Government financial and fiscal policies that could make Commonwealth Government Securities more attractive to investors.