Suppose Government Spending Decreases by $10 Billion and the Marginal

Multiple Choice

Suppose government spending decreases by $10 billion and the marginal propensity to consume (MPC) is 0.8. Given this information, this decrease in government spending will cause a(n)

A) increase in equilibrium real GDP equal to $50 billion.
B) increase in equilibrium real GDP equal to $80 billion.
C) decrease in equilibrium real GDP equal to $50 billion.
D) decrease in equilibrium real GDP equal to $80 billion.