ocr: The total amount of money put back into the economy from the initial $20 billion tax cut is (920)(90)4(920X(907-+(820)90P+ : Do yousee that this is an infinite series? The first term is 21 =($20)(.90) - and the ratio is r == 0.90. The sum of this series is 21 ($20).90) =180 - - So=, 1-r 1-0.90 Thus, over the course of time, the total effect of the $20 billion tax cut is to put $180 billion back into the economy. - - - - - Tax Cuts and the Money Supply
