If an economy experiences a decrease in the money supply, short-run unemployment decreases and hence output increase.
What is the relation between money supply and unemployment rate?
In principle, we can draw the conclusion that an increase in the money supply will, over time, raise domestic prices to a greater extent, reducing both labour and capital unemployment rates.
The reference is Natural Rate of Unemployment.
When the unemployment rate is at its natural rate, economists often state that the economy is operating at full employment output. The rate that prevents inflationary pressures in the economy is known as the natural rate. It is a rate that accommodates typical changes that occur in labour markets. For instance, some people are unemployed right now because they just graduated from college and are looking for their first job.
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