Moderate inflation and temporary increases in prices can be caused by non-monetary shocks. The relationship between money and output is summarized in the Quantity Theory of Money. The QTM is based on the notion that the value of all transactions must equal the value of all purchases. The velocity V is usually greater than 1 and its value depends on institutional factors like the payment structure, presence of a developed banking system, etc. If the growth rate of Y depends on the growth of full employment output which in turn depends on growth of resources, improvements in technology etc., then money growth will lead to an equal growth in the price level.
Money typically has very little impact on output in the long run.
But changes in money supply can influence output in the short run. The impact on output in the short run is given by the short run Phillips Curve. A. W. Phillips, a British economist, studied the relationship between wages and employment during a 100 year period and found an inverse relationship between the growth rate of nominal wages and the unemployment rate. Since the nominal wage is tied to the price level, this inverse relationship also leads to an inverse relationship between the inflation rate and the unemployment rate. The curve depicting this inverse relationship is called the Phillips curve.