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Please define the oversimplified multiplier and use your knowledge of the concept to answer the following question. Suppose that GDP is currently $25,000 and the marginal propensity to consume is .50. If autonomous investment increases by $5,000, what will GDP be in the new equilibrium? Assume the oversimplified multiplier is accurate.

Please describe the concept of investment spending, as well as what will happen to the aggregate demand curve if investment spending is increased autonomously. Also provide an example of spending that a macroeconomist would consider "investment spending."

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Investment spending is exemplified.

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The oversimplified multiplier shows the impact of a change in one of the components of aggregate demand (consumption, investment, government spending, or next export) on equilibrium GDP, under the assumption that the price level is fixed. The formula is:
Multiplier = 1/(1-MPC)
(The money spent on investment will be ...

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