can someone explain this for me? I figured MPS = 0.125 (5000/40000), and therefore ME = 8 (1/0.125) but the mark scheme states the answer as 4.
3a) An injection of £10,000 into the economy eventually leads to £5,000 in extra saving,£35,000 of extra consumption and £40,000 of extra income. Therefore the multiplier can becalculated as
What do you think?