Please explain this diagram, thanks !

Y" When money supply grows fast, the nominal money supply is high, but the price level is even higher. This is illustrated in Fig. 7.4, where we illustrate the path of money supply and the price level for an economy which first has a constant money supply and price level and then a constantly growing money supply and price level from time r onwards. We assume here that the increase in money growth is unexpected but perfectly foreseen after time r. Production is at the nat- ural level, assumed to be constant. We consider the natural logs of prices and money because a constant change in the log of P corresponds to a constant per- centage change - that is, constant inflation. When money growth and inflation increase, the nominal interest rate will increase and real demand for money bal- ances decreases. Hence there is a jump in the price level and a downward jump in real balances. After that, money and prices grow at the same rate. Inflation is a tax on holding money and the higher the inflation tax on money, the less people want to hold of it, in real terms. Fig. 7.4 An unexpected and permanent increase in the money growth rate at time r In M, In P In M In P In M-In P Time T