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
“the market” is not an independent thinking thing. It’s not sentient.
What would happen is that this new money would enter the market through some means, likely by banks being more willing to lend money.
Banks lending more money means people buy more homes, borrow more on their credit cards, businesses expand by building new plants and such. This all results in people buying more things.
People buying more things means that demand has increased for goods. Since supply of goods is not effected it means that prices need to rise in order for supply and demand to be in balance.
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