00:01
Okay, so basically we want to look at the relationship between the injection that we can have in an economy and how that will result in an increase in the money in that particular economy and how much total money will be circulated throughout the economy as a result of an injection.
00:26
The injection basically is going to be looked at as a cut in the text.
00:30
So it cut in the tax of $10 billion.
00:38
And the other information that is given is that the consumers have a tendency of saving 7 % of any additional money they receive.
00:48
So basically the marginal propensity to save is actually 7%, 0 .07.
00:54
And the marginal property to consume, mpc rather, mpc is actually 0 .93.
01:11
Now, given this, you then are required to see what the multiply is, because we want to find out what the 10 billion saving, i mean, tech scott, which is an injection in the economy, would result in.
01:25
So the multiply is actually given by a formula.
01:29
And the formula would be the multiplier is equal to one over mps, so which is one over the marginal propensity to save, which is 0 .07.
01:44
All right, so we are going to multiply this amount by the 10 billion that has been invested in order for us to arrive at the increase in the total income...