Final answer:
An increase in investment spending of $10 billion in an economy with an MPS of 0.33 will result in a shift of the aggregate demand curve rightward by $30 billion, and the real GDP will increase by the same amount, $30 billion, which is option B in the choices given.
Step-by-step explanation:
The question concerns how an increase in investment spending affects the aggregate demand curve in an economy where the MPS (marginal propensity to save) is 0.33 and the aggregate supply curve has a slope of 1. To determine the impact, we apply the concept of the multiplier effect, which in macroeconomic analysis delineates how initial investment spending is magnified in the economy. The multiplier (k) can be calculated using the formula k = 1 / (1 - MPC), where MPC (marginal propensity to consume) is equal to 1 - MPS. Given that MPS is 0.33, the MPC would be 0.67, and the multiplier would be 1 / (1 - 0.67) = 3. Therefore, an increase in investment of $10 billion would shift the aggregate demand curve rightward by 10 billion * 3 = $30 billion. With a perfectly elastic aggregate supply curve (slope of 1), the increase in real GDP would also be $30 billion, corresponding to option B of the multiple-choice question provided.