The proposition that the price of a resource is expected to rise at a rate equal to the interest rate is called the

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The proposition that the price of a resource is expected to rise at a rate equal to the interest rate is known as the Hotelling Principle. This principle is named after Harold Hotelling and is based on the idea that owners of nonrenewable resources will only extract them if the expected price of the resource at the time of extraction is greater than or equal to the foregone interest that could have been earned by leaving the resource in the ground. Thus, the price of a nonrenewable resource will increase over time at a rate equal to the interest rate.

The Proposition That the Price of a Resource Is Expected