1. If policies were put in place to increase investment spending by $50 billion, what would be the potential effect on RGDP if mpc=.80
The Real GDP would increase because more spending means less saving and spending is added to GDP. The total increase in real GDP would be 1/(1-.8) x 50 Billion or 250 Billion.
2. If disposable income remains stable, how can consumption change?
If the disposable income remains stable, the consumption will change depending on certain factors. Individual household consumer spending can increase without a change in disposable income.
