Read Reserve Bank of Australia (undated)Bonds and the Yield Curve,https://www.rba.gov.au/education/resources/explainers/bonds-and-the-yield-curve.html

Access the RBA chart 'Spread between Australian 10-year Bond Yield and the Cash Rate Target' athttps://www.rba.gov.au/chart-pack/interest-rates.html#10.

1. Distinguishing between a normal yield curve, a flat yield curve and an inverted yield curve, provide an explanation for each in terms of the expectations theory. Of the three types of curves evident in the data provided, which is the most common? Is there evidence exhibited in the data for the other two?
2. The period between late 2008 and 2010 has often been associated with Australia's response to the Global Financial Crisis (GFC). First, consider the period mid-2006 to mid-2008 which led up to Australia's response. What was the dominant shape of the yield curve over this period? What was happening in the economy at this time to produce this result? Next, consider the period from mid-2008 to end-2009 over which much of Australia's response to the GFC was implemented. What was the dominant shape of the yield curve? What was happening in the economy to produce this result?
3. Consider the period end 2021 to end 2023. Over this period, the yield curve was inverted, reversed this and is now inverted again. What explanation can you provide for this change? What was happening to the shape of the yield curve in 2022? What explanation can you provide for this change? Looking ahead to 2024 and 2025 do you expect the yield curve to remain nverted during this period? Explain why or why not.