Reverse. Higher costs lead to higher prices. Cost can be pay or materials or taxes, doesn’t matter to business. Cost is cost. Price is constrained by efficacy

Reverse. Higher costs lead to higher prices. Cost can be pay or materials or taxes, doesn’t matter to business. Cost is cost. Price is constrained by efficacy of competitors. If your only person in town that digs holes, you can use a spoon and charge anything you want. Until someone buys a backhoe and Charges half your price. Wages are constrained the same way. If your making lots of money, and need more help but only 1 guy available. He is going to get paid a lot. If there 10 people free you offer the lowest that someone is willing to take that you still make money. If your the government and want to spend money then you just print a bunch of money. This is true source of inflammation.