MACRO QUERY:Cost-Push + Demand-Pull inflation and "elasticity"-- does it apply ?

[som...@somewhere.com]

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

[orang...@googlemail.com]

cost-push inflation is nonsense. inflation is a monetary phenomenon.
The equation of exchange is

mv =pq

where m=amount of money in circulation, v = velocity of money, p =
price level q = quantity

see - http://en.wikipedia.org/wiki/Equation_of_exchange

so,if the price of something like oil increases and the amount of
money does not change then the velocity of money decreases.