If real extraction costs do not change,the relative price of a finite resource would be expected to
A)fall over time.
B)remain constant over time.
C)rise at a rate given by the nominal rate of interest.
D)rise at a rate given by the real rate of interest.

Question

Quizplus · Accepted Answer

The relative price of a finite resource is expected to rise at a rate given by the real rate of interest if real extraction costs do not change. This is because as the resource becomes scarcer, its value increases, and the real rate of interest reflects the time value of money in real terms, accounting for inflation.

If Real Extraction Costs Do Not Change,the Relative Price of a Finite