Please explain if a trigger event which causes a workflow rule to fire and the goes in a loop. or will it terminate after some update?
This is covered in the documentation on the order of execution.
Salesforce has thought of this, and has put safeguards in place to prevent infinite loops.
If a workflow rule on an object, call it ObjectA, has a field update (also on ObjectA, for sake of ease), it will cause the
before update and
after update triggers for ObjectA to fire precisely one more time.