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Next Year's Expected Price of Oil Is $90 Per Barrel

Question 103

Multiple Choice

Next year's expected price of oil is $90 per barrel. If the interest rate climbs from 5 percent to 20 percent per year and nothing else changes, then according to the Hotelling Principle the price of oil this year


A) will rise.
B) will fall.
C) will not change.
D) could rise, fall, or stay the same.

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