Real GDP Equals $200 Billion, the Government Collects 20% of Any

Multiple Choice

Real GDP equals $200 billion, the government collects 20% of any increase in real GDP in the form of taxes, and the marginal propensity to consume is 0.8. If potential output equals $255.6 billion, the government could close the _____ gap by increasing government spending by _____.

A) recessionary; $20 billion
B) recessionary; $55.6 billion
C) inflationary; $20 billion
D) inflationary; $55.6 billion