Currently a government budget is balanced. The marginal propensity to consume is 0.75. 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 by 0.20 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 price level, it must generate a net rightward shift in the aggregate demand curve equal to $250 billion.

Assuming that there are no direct expenditure offsets to fiscal policy, calculate the increase in government expenditures. (hint: how much private investment spending will each $10 billion increase in government spending crowd out?) Round answer to two decimal points.

Please list answer step by step.

Richardson hired j.c. flood company, a plumbing contractor, to correct a stoppage in the sewer line of her house. the plumbing company's 'snake' device, used to clear the line leading to the main sewer, became caught in the underground line. to release it, the company excavated a portion of the sewer line in richardson's backyard. in the process, the company discovered numerous leaks in a rusty, defective water pipe that ran parallel with the sewer line. to meet public regulations, the water pipe, of a type no longer approved for such service, had to be replaced either then or later, when the yard would have to be excavated again. the plumbing company proceeded to repair the water pipe. though richardson inspected the company's work daily and did not express any objection to the extra work involved in replacing the water pipe, she refused to pay any part of the total bill after the company completed the entire operation. j.c. flood company then sued richardson for the costs of labor and material it had furnished. (c) for what, if anything, should richardson be liable? explain."