Cast of Sunny Afternoon, "The Moneygoround"

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.