Choice "B" is correct. Government expenditures must increase by $20 billion in order to increase the GDP by $100 billion (from $1.2 trillion to $1.3 trillion). Government expenditures will benefit from the multiplier effect, i.e., the multiplied increase in the level of economic activity that results from increased spending in the economy. The multiplier effect results from the marginal propensity to consume. The level of spending required to achieve a $100 billion increase in the economy, assuming a 0.8 marginal propensity to consume, is as follows:

Choices "a", "d", and "c" are incorrect based on the above calculation.