Suppose the following list of events describes all of the economic activity resulting from an increase in government spending. Suppose that at each step after the initial one, the marginal propensity to consume is 0.88 and there are no taxes.

Step 0. The government spends $4500 on meat to host a very large dinner for foreign diplomats.
Step A. The butcher takes the income earned by selling the meat, saves some, and spends the rest on a wedding cake for his daughter.
Step B. The baker who produced the wedding cake saves some of her earnings and uses the rest to purchase beautiful candlesticks as gifts for all of her friends.
Step C. The local candlestick maker saves some of his revenue for retirement and spends the rest on building materials to improve his house.

Required:
a. How much does the butcher earn for selling the meat?
b. How much does the candlestick maker spend on cake?

To find out how much money the butcher spent on cakes (the pastry chef's profit) and how much the pastry chef spent on candles, it is necessary to carry out the following operations:

Divide the butcher's money ($ 4,500) by 100 and multiply it by 88.

$ 4,500 / 100 × 88 = $ 3,960

Then we performed the same operation, replacing the $ 4,500 with $ 3,960 to find out how much the baker spent on candles.

$ 3,960 × 88 = $ 3,484

Finally, to find out how much the candlestick maker spent on building materials for his house, we performed the same operation, replacing the $ 3,960 with $ 3,484.

$ 3,484 / 100 × 88 = $ 3,065

According to the above, it can be inferred that The baker earn $ 3,960 for selling the cak, and spend $ 3,484 on candlesticks.

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Note: The questions are incorrect, the correct questions are:

How much does the baker earn for selling the cake?
How much does the baker spend on candlesticks?