Can you check my answers and fill the rest of the blanks above? The multiplier e

Question

Can you check my answers and fill the rest of the blanks above?

The multiplier effect of a change in government purchases Consider a hypothetical closed economy in which households spend $0.80 of each additional dollar they earn and save the remaining $0.20. The marginal propensity to consume (MPC) for this economy is 4/5, and the spending multiplier for this economy is Suppose the government in this economy decides to increase government purchases by $300 billion. The increase in government purchases will lead to an increase in income, generating an increase in consumption that increases income yet again, and so on. Fill in the following table to show the impact of the change in government purchases on the first two rounds of consumption spending and, eventually, on aggregate demand. Suppose that the economy opens up to international trade, and households still save $0.20 of every dollar they earn. However, instead of spending the remaining $0.80 on domestic goods, they now spend only $0.75 of every dollar they earn on domestic goods, with the difference spent on imports. The marginal propensity to import (MPI) for this economy is_and the spending multiplier for this economy is now True or False: The total change in demand due to a change in government expenditures will be smaller in the closed economy.

Explanation / Answer

in the first question ,MPC =4/5 and spending multiplier is 5.

the second question,

to increese in government puchase=300

so, first change in consumption=300/0.80=375 billion

second change in consumption=375/0.80=468.75

total change in demand=300/0.20=1500 or 1.5 trillion

the third question,

Marginal propensity to import=3/5 and spending multiplier=5

True or false

Answere is false because the multiplier is much smaller now so an increese in autonomous spending will have a smaller effort on national output.

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