Q2:

The following figure shows the path of the 10 year bond yields of the advanced

economies.

(a) Explain why the Australian yield is generally higher than the others, referring

to commodity price volatility and detailing the reasons why this volatility is

different from that experienced in global markets for manufactures.

(b) Explain why the yields tend to move up and down together.

(c) Speculate on why Japan's 10 year bond yield has been lower than those of

the other advanced economies.