It is well known that there is a strong connection between introducing more money into an economy and inflation, as well as removing money and deflation.
However, how does the economy as a whole "detect" if money is removed from it?
A similar question would be how it detects whether the supply of money is increased, but that I could understand and explain better as printing new money is regulated, so the government and banks know about the increase and act accordingly. (yes, I know, printing money is not the only way to produce it, but I would guess creating new debt is also regulated or measured in some way)
I could also explain extreme cases, where the amount of money created or destroyed makes up a significant portion of the total amount. If suddenly such a large amount of money appeared, people would start to buy more things, and as the supply of things to buy is not enough, people will pay more money for it to be able to get it by out-bidding others, so prices increase, and we have inflation. Or if a significant portion of the money supply is destroyed, there is an abundance of things to buy, but not enough money to buy things, so prices will have to be lowered otherwise nobody would buy anything, so we have deflation.
However, by what mechanisms does it happen that small (but not negligibly small) amounts of change in the money supply cause small amounts of inflation or deflation?
For example, if one very rich person would sell off some property in cash or take cash out of bank accounts, and just burn or bury that cash without telling anyone, how would the economy "know" it and by what mechanisms would it cause deflation? The amount in this example is not enough for people to consciously realize that money is missing from the economy so they could adapt their spending habits accordingly.