The impact of money on real output and the price level over short-term and medium-term horizons, and the speed at which a change in money growth affects inflation, depend on behavioural and institutional factors and, most importantly, on the way inflation expectations are being formed and influenced.
Over the last several quarters, demand has not been expanding as quickly as the economy’s productive capacity, and the result has been the marked lack of job growth. But as demand accelerates, job growth should improve also.