12. Consider the following AD-AS model: AD: Pt + yt = mt + Vt , AS: yt = y* - at(Wt- pt) - w}, a > 0, Wage Contract: Wt = Wt-1 + (pre - pt-1), where pt, yt, mt, Vt, Wt are log-price, log-GDP, log-money, log-velocity, log- wage at time t, respectively. y* and w are potential GDP and target real wage in log terms. (a) Give intuitive interpretations for AS and Wage Contract equations. (b) When monetary authority increases money supply once and for all, how would y and p be affected over time? Analyze this situation by drawing AD and AS curves under the assumption that p. = pt-1, Wt-1 - pt-1=W, and m-1