Given a remote island economy whose one million citizens each receive a tax rebate of $40 as a way for the nation's government to combat the record high rate of unemployment.The resulting increase in GDP, from $800 million to a new level of $960 million, had the effect of moving the nation's unemployment rate to the lower rate that had been targeted (assume no change in the price level).

a) Calculate the marginal propensity to consume (MPC) in this particular economy (show the steps taken to reach your answer).

b) The government opposition leader claimed that a program to expand the highway system would have had exactly the same impact on the economy's GDP.If so, how much would that program have cost the treasury?Show your calculations.