1. Suppose P=Pe=100. Draw the economy at a long-run equilibrium in the AD-AS analysis based on this expected price level. Suppose further that the public employs simple adaptive expectations when forming price expectations (a) Suppose next month the RBA decides to increase interest rates out of a concern that the current low interest rate is producing a housing price bubble. What action should the RBA take to address this issue? (b) Show graphically the short-run impact of the RBA's action according to the AD-AS model. (c) Continue with the long-run adjustment of the economy. (d) Discuss the short and long-run consequences of the RBA action and why they take place. 1. Suppose P=Pe=100. Draw the economy at a long-run equilibrium in the AD-AS analysis based on this expected price level. Suppose further that the public employs simple adaptive expectations when forming price expectations (a) Suppose next month the RBA decides to increase interest rates out of a concern that the current low interest rate is producing a housing price bubble. What action should the RBA take to address this issue? (b) Show graphically the short-run impact of the RBA's action according to the AD-AS model. (c) Continue with the long-run adjustment of the economy. (d) Discuss the short and long-run consequences of the RBA action and why they take place