Answer
The government will need to spend 80 billion dollars. The money multiplier is 5, so the purchases will have a total change on the economy of 400 billion dollars. This will get rid of the economy's gap.
Work Step by Step
marginal propensity to consume is 4/5
$1/(1-4/5)$
$1/(1/5)$
$1/.2$
$5$ is the money multiplier
can change government spending
need 400 billion in spending to revert to natural level
$400/5$
$80$
