Answer: $2.5 billion
Explanation:
You need to first calculate the multiplier.
The multiplier is the amount that shows the effect of an increase in government spending on the aggregate demand of a country.
It is calculated as:
= 1 / ( 1 - MPC)
= 1 / ( 1 - 0.9)
= 10
Increase in aggregate demand = Government spending * multiplier
25 billion = G * 10
G = 25 billion / 10
= $2.5 billion
