Use the Information Below to Answer the Following Questions

Multiple Choice

Use the information below to answer the following questions.
Fact 18.4.1
Water is a natural resource that is plentiful in Canada but not plentiful in Arizona and southern California. Suppose Canadians start to export bulk water to Arizona and southern California.
-Refer to Fact 18.4.1. The Hotelling Principle ________ apply to Canada's water because the Hotelling Principle ________.

A) does; applies to renewable resources and water is a renewable resource
B) does; only applies when the interest rate is falling
C) does not; applies to nonrenewable resources but water is a renewable resource
D) does not; only applies when the interest rate is rising
E) does; applies when interest rates are relatively low