Suppose that an increase in government spending of $50 billion raises aggregate demand for goods by $150 billion.

a.(2)If the economy is closed and there is no crowding out, what is the marginal propensity to consume and what is the multiplier equal to?

b.(2) If the economy opens up and allows for trade with other countries, would the multiplier increase or decrease? Explain.

c. (2) Briefly explain the difference between deliberate fiscal policy and automatic stabilizers and give an example of an automatic stabilizer.