Cost Push inflation: Caused by substantial increases in the cost of important goods or services where there are no alternatives these substantial increases occur when there is a shortage in labor or capital goods. Example: gasoline
Demand pull inflation: Caused by an increase in the demand for a good or service outstriping supply. Sellers sell out a certain product having to produce more but if supply is costrained they would raise the price on the product causing the inflation. Example: if people would to predict that the economy would do good they will strive for bigger homes thinking they'd get a better job so they will spend more instead of saving more.
Quantity theory: When money supply has a direct/proportional relationship with the price. Example: If currency circulation increased the price would have a proportional effect in goods or service.
Negative consequences of inflation
Inflation erodes international competitves.
redistributes income from people on fixed incomes.
causes demand for exports to decrease leading to a devaluation meaning decreasing the value of the country's currency to foreign country's.
Hyperinflation is when inflation occurs at a rapid time. A recent study of hyperinflation was in Zimbabwe. President Robert Mugabe in the 1990s, instituted land reforms and intended to redistribute land from white land owners to black. But becuase the farmers that were hired were not trained, production in food and other goods dropped drastically. Banking also collapsed becuase these farmers could not pay off the loans they requested for a capital development. With agricultural output foreign exchange dropped.