Assume there are no investment projects that will produce an expected rate of return of 8% or more. There are, however, $2 billion worth of investment projects with an expected rate of return at 7%. There is an additional $2 billion for every drop of the interest rate by 1%. If the real interest rate is 3% in this economy, the cumulative amount of investment at the 3% or higher rate of return is
A. $10 billion.
B. $4 billion.
C. $6 billion.
D. $8 billion.
Answer: A
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