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Suppose that agents come to expect a higher inflation rate which in the model is represented by an increase in the exogenous variable +1

 

Suppose that agents come to expect a higher inflation rate which in the model is represented by an increase in the exogenous variable +1 (a) Graphically show how this affects the endogenous variables of the in the simple sticky-price model. Discuss how consumption, investment, the real wage, and the labor input change. (b) Graphically show how this affects the endogenous variables of the in the partial sticky-price model. Discuss how consumption, investment, the real wage, and the labor input change. (c) Graphically show how this affects the endogenous variables of the in the Neoclassical model. Discuss how consumption, investment, the real wage, and the labor input change.

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