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QUESTION 12 If inflation is too high, the RBA will (increase / decrease) its cash rate target. If the actual cash rate remains below the target, the RBA can intervene via open market sales ー ーーー ーー ーーー ーー ーーー ーーー ー (purchases / sales] of bonds. The yield curve is likely to shit (up / down), especially at its end The impact on the long end of the yield curve can be strengthened by convincing market (short/long) participants that the new cash rate target will be somewhat permanent) The described change in nominal interest rates is also affecting the real interest rate if prices are rates will cause businesses and households to spendings and thus dampen inflation. (temporary / (somewhat sticky totally flexible) The change in real interest (cut back /increase) their 10 po QUESTION 13 nd Submitte sare and submit. Click Save All Answers to save all ansu
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Ans A in rease because it increases cost of credit and thus lowers inflation B sale so that money supply falls and thus cash rate rises C down at short end D permenant. Expectations that changes will occur in short run only leads to short run effect mainly E flexible. Note real interest rate nominal interest rate minus inflation FUT because cost of borrowing has risen

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