1) the potential effect will be $50 billion * (1/(1-.8) = $250 billion because the 80% of the money going into investments is being spent on other stuff, and then 80% of that money is being spent and so on. The money being spent compounds in smaller and smaller increments to equal $250 billion. This is known as the multiplier effect.
2)Even if people are spending the same amount of money on consumption, what they spend that money on can change. Also, depending on how the MPS and MPC changes, different amounts of the same disposable income change. If the MPC goes up, more money will be spent and vice versa.
