InvestorQ : If an employee of a company receives the same amount of salary, even after an increase in money supply, how is that supposed to increase his purchasing power? Will he not have the same amount of money to spend unless his salary is raised?
rishabh duara made post

If an employee of a company receives the same amount of salary, even after an increase in money supply, how is that supposed to increase his purchasing power? Will he not have the same amount of money to spend unless his salary is raised?

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Niti Shenoi answered.
6 months ago
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Purchasing power in the above case is measured in overall terms not in individual terms. This is called the trickle down effect. When money supply is expanded, some people are going to benefit from higher liquidity. This is about overall liquidity and overall purchasing power not about everyone's individual purchasing power.
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