Question

What determines inflation in the short Run? Explain using the Classical model, Keynesian model or Phillips curve.

Answer 1

Basically there are two causes behind inflation :
1) When the demand -pull conditions causes widespread increase in price
2) Cost push factors
3) Expansion of money supply may be another cause, but that is a type similar to demand -pull inflation

Now for the short run , inflation rate and the output level gets determined by the point where Short Run Aggregate Supply is equal to dynamic Aggregate Demand.
Figure: Inflation and output in the short run
Now initially the economy was at equilibrium point E , where Dynamic AD (Aggregate Demand) = Short Run AS (Aggregate Supply) , and inflation rate , output level at this stage is given by  π₀ and Y₀ respectively.
When DAD rises , it raises the inflation rate . But the increase in inflation rate is lesser than the money growth rate (m) .
Other than that , any increase in expected rate of inflation (π^e) or instances like adverse supply shock are respionsible for  higher inflation and lower output level, the situation which is most commonly  known as stagflation.