The money and inflation are said to have a positive
relationship between themselves.
When the government purchases government securities from the
open markets, the money supply increases more than the real
output.
This excess money supply will lead to inflation in the economy
as more money is changing for the same amount of goods.
Similarly, when the government sells government securities in
the open markets, the money supply decreases more than the real
output.
The decrease in money supply will hence lower the inflation in
the economy which leads to a decline in general price level.
This relationship between money and Inflation is more apparent
if the time period between them is much longer and it is much less
apparent in short run.