Final answer:
Money supply and demand are brought into equilibrium by the overall level of prices. The quantity theory of money explains this relationship.
Step-by-step explanation:
In the short or long run, money supply and money demand are brought into equilibrium by the overall level of prices. This is known as the quantity theory of money, which states that the quantity of money in an economy influences the overall level of prices.
When the money supply increases, people have more money to spend, increasing the overall demand for goods and services. As a result, producers increase the prices of their goods and services to meet the higher demand, bringing money supply and money demand into equilibrium.