Suppose the federal govt. is considering two policies to improve transportation infrastructure in all 50 states. Each state govt. has identified $2 billion in road construction projects. The federal govt. could:

1) spend $20 billion on road repair projects not currently being undertaken by states

OR

2) subsidize 20% of state spending on road construction projects

Assume 25 states will undertake the repairs regardless of federal funding, 15 states will undertake the repairs if they receive the federal subsidy, and 10 states will not undertake the repairs either way.

How much spending on road construction occurs per dollar of federal spending from implementing option 2?