1) The RGDP would increase by 250 billion dollars. You would have to find the multiplier, which is calculated by doing 1-mpc. Then you would multiply 1/1-mpc by 50 billion to get 250 billion dollars. We do this formula because people will spend only 80 percent of what they receive and by using this formula we will calculate the total addition to Real GDP.
2) If disposable income remains stable, consumption can change because of expectations of prices. If people believe that the price is going to go up in future months then people would begin to buy more of that product right now. In this case consumption would go up in this situation.
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