If the price of a natural resource is expected to rise at a rate that exceeds the interest rate,demand ________,supply ________,and the price ________.

Question

Quizplus · Accepted Answer

When the expected future price of a natural resource increases at a rate higher than the interest rate, the demand for the resource will increase, as people will want to buy it now before the price goes up even further. However, suppliers may decrease their supply in the short term, as they may be holding on to their stock in anticipation of higher future prices. This temporary decrease in supply combined with the increase in demand will result in a higher price for the resource in the short term. Therefore, option B is the most appropriate choice.

If the Price of a Natural Resource Is Expected to Rise