Real GDP Equals $400 Billion, the Government Collects 25% of Any

Multiple Choice

Real GDP equals $400 billion, the government collects 25% of any increase in real GDP in the form of taxes, and the marginal propensity to consume is 0.8. If the government decreases spending by $40 billion, real GDP will decrease by:

A) $40 billion.
B) $80 billion.
C) $100 billion.
D) $200 billion.