a. Derive the IS curve and compute equilibrium output and interest rate b. Derive the LM curve and compute equilibrium money supply c. Suppose the Central Bank revalues exchange rate from 1 to 0.85. Recalculate the equilibrium output, interest rate, and money supply d. Suppose the Central Bank devaluates the exchange rate from 1 to 1.3. Recalculate the equilibrium output, interest rate, and money supply.

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Factor Models

Many attributes might be related to an asset's risk, including market capitalization (size), dividend yield, growth, price-earnings ratio, etc. The use of these traditional descriptors, however, presents a few problems: