If x amount of money were introduced (discretly, with no one noticing) to the market, how does the market “know” that that amount of money has been introduced (thus adjusting prices)?

Question

If x amount of money were introduced (discretly, with no one noticing) to the market, how does the market “know” that that amount of money has been introduced (thus adjusting prices)?

In: Economics

Answer 1

Supply and demand does not just work with goods, it also applies to currency itself.
When more currency is added, there is less demand for it, making the currency worth less.