Currently, agovernment's budget is balanced. The marginal propensity to consume is 0.80. The government has determined that each additional $10 billion in new government debt it issues to finance a budget deficit pushes up the market interest rate by 0.10 percentage points. It has also determined that every 0.10 (one-tenth) percentage-point change in the market interest rate generates a change in planned investment expenditures equal to $2 billion.Finally, the government knows that to close a recessionary gap and take into account the resulting change in the pricelevel, it must generate a net rightward shift in the aggregate demand curve equal to $150 billion.

Assuming that there are no direct expenditure offsets to fiscalpolicy, calculate the increase in government expenditures necessary to close the recessionary gap. (Hint: How much private investment spending will each$10 billion increase in government spending crowdout?)

I don't quite understand what the question is asking and what formula to use. If you could provide a breakdown of how you found the solution so that I may better understand it, that would be very helpful.