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What is quantitative easing, and what is the impact of quantitative easing on reserves in the system? Under what condition, does the central bank implement

  1. What is quantitative easing, and what is the impact of quantitative easing on reserves in the system? Under what condition, does the central bank implement the quantitative easing? How might quantitative easing affect the cash rate? (3 marks)
  2. Government debt is made cheaper when the Reserve Bank purchases bonds. Explain this statement. What is the impact of QE on the yield of government bonds? How has RBA been able to control the rate of interest on these bonds? (2 marks)

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