Consider the following aggregate demand and supply relations and the monetary policy rule. yt= β0 + β1(mt -pt) + ωt     (AD)           yt= yn + α (pt -Et-1pt) + νt (AS) mt= μ0 + μ1mt-1 + et   (MP) The random term for AD has the moving average form ωt =ξt+ρξt-1, where ξt, et, andνt are white noise terms. Derive a solution for ptand yt.Interpret your solution for pt, using directly your solution for it and your expectations regarding the signs of the AD, AS and MP parameters.

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