Hi,
I am trying to explain Cost-Push inflation .Can the concept of
elasticity be used in Macroeconomics ?
If so , how is elasticity relevant in demand-pull and cost-pull
inflation ?
So far I have avoided using the term (I think it only pertains to
Microeconomics ) and instead have talked about the multiplier effect
and the slope of the SR-AS curve i.e either more flat(increases the
multiplier) or more vertical ( decreases the multiplier ).
My graph has Price on the vertical axis and Q(output)or GDP on the
horizontal axis.
Can anyone help clear this up ?
Any help appreciated and thanks in advance.
Peter