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Ripple effects (k) of an IR - Coggle Diagram
Ripple effects (k) of an IR
Trigger
Initial injection into circular flow = $x spent to build the IR
Initial impact
+$x in national income (employment of casino workers)
+$m in induced consumption (as SG is affluent, people spend money for gambling)
$ (x-m) in savings, taxes and imports
Subsequent round
+$m in national income (income for households generated due to increased consumption)
+$b in induced consumption (households supply more resources to gambling industry)
+$ (m-b) in savings, taxes and imports
k = 1/(1-MPC)
Final impact
+$x in savings, taxes and transport
+$z in national income
+$ (z-x) in induced consumption
Evaluation
Due to national saving schemes (eg CPF), high MPS --> more prudent gambling habits --> high MPW --> lower k
Due to casino tax in SG, MPT is high --> higher leakage through taxation --> lower k
SG is dependent on imports due to scarcity of natural resources --> higher MPM --> bulk of additional income used for imports --> lower k
Therefore k is low