If I remember correctly, the 1977 Mustang
is really a Mustang II and the biggest engine that they came with was a 302 ci (5.0L) engine.
Anyway, it was a carbureted engine that doesn't have the benefits of fuel injection, computer control of engine functions, and updated engine design features (e.g. hydraulic roller camshaft, etc). So, I wouldn't expect great gas mileage. Also, your existing engine may be getting old and worn out and in need of a rebuild to regain some gas mileage.