What type of inflation occurs when there is more money in the market and fewer goods for sale?

The situation described in the question refers to demand-pull inflation. This type of inflation occurs when the demand for goods and services exceeds their supply. When there is an increase in the money supply, consumers and businesses have more funds available to spend, which can lead to heightened demand for limited goods in the marketplace. As demand outstrips supply, prices tend to rise, resulting in inflation.

This scenario perfectly illustrates the mechanics behind demand-pull inflation. It reflects how an influx of money can create increased spending power, thus pushing up demand and consequently, prices, particularly when the production of goods does not keep pace with rising consumer interest and purchase intentions. When supply fails to meet this growing demand, inflationary pressures are created within the economy.

Other types of inflation like cost-push inflation relate to increases in production costs leading to higher prices, while hyperinflation denotes extremely rapid or out-of-control inflation, and stagflation reflects a combination of stagnant economic growth and inflation. These do not encompass the direct relationship between increased money supply and demand exceeding supply characteristics showcased in demand-pull inflation.