1) Computation of Value of Initial Impact on Real GDP:

MPC = 0.70

Increase in government spending = $20 billion = First round impact on real GDP.

Second round impact = 0.70 * First Round Impact = 0.70 * $20 billion = $14 billion.

Third round impact = 0.70 * Second Round impact = 0.70 * $14 million = $9.8 billion.

2) Computation of Value of Total Impact on Real GDP:

Total impact = $20 billion*1/(1-MPC) 

= $20 billion*1/(1-0.70)

= $20 billion*1/0.30

Total Impact = $66.67 billion