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The Moneygoround (Sunny Afternoon)

by Matthew Rousu

While The Kinks are unhappy about their money being spent before it reaches them, we can be happy that this song is a great introduction to the multiplier effect.
The amount of final income from a new injection of spending is more than the initial injection. The amount of total income that is created is related to the marginal propensity to consume and the formula is 1/(1-marginal propensity to consume).
For example, if $100 is added to an economy and each person spends 50% of the money received (which means 50% is saved), the total increase in income is $100*1/(1-0.5) = $200.

The Moneygoround

In “The Moneygoround”, The Kinks are singing about how their money keeps getting split up and re-spent before it reaches them. The band, naturally, does not sound happy about this occurring.

from Sunny Afternoon (2014)
Creator: Ray Davies
Posted by Matthew Rousu
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