Correct option is B
The correct substitution of the highlighted words is (b) knew everything.
Explanation: With
as if to show an unreal/hypothetical present situation, we use the
past tense (unreal past/subjunctive sense). The speaker implies he
does not actually know everything; it only seems so. Therefore, “He behaves
as if he knew everything” is the idiomatic, grammatical choice.
Grammatical rule used: After
as if / as though to express an
untrue or doubtful present situation, use a
past-tense verb (often called the unreal past), e.g.,
He talks as if he
were
the boss.
Example:
She looks at me as if she
knew
all my secrets.
Information booster: When the situation is
contrary to fact in the past, we use
past perfect after
as if:
He spoke as if he
had seen
the accident.