The Victorian Government announced plans to spend about $3 billion to revamp five train stations and remove 10 level crossings as part of new major rail works in the state. Assume that the marginal propensity to consume among Victorians is 0.8, explain why this might potentially increase GDP by an amount that is a multiple of $3 billion.

Include the following in your answer,

a) explanation of marginal propensity to consume (mpc),

b) explanation marginal propensity to save (mps)

c) calculation of the spending multiplier

d) potentially what the increase in GDP might be and why.