1. Closed economy multiplier
\(\frac{1}{1-c}\) = \(\frac{1}{1-0.8}\) = \(\frac{1}{0.2} = 5\)
Open economy multiplier
\(\frac{1}{0.5} = \frac{1}{1-0.8+0.3} = \frac{1}{1-0.5} = \frac{1}{0.5}\) = 2
2. If domestic autonomous demand increases by 100, in a closed economy output increases by 500 whereas it increases by only 200 in an open economy.