If Speculators Expect the Future Price of a Commodity to Rise

question 37

Essay

If speculators expect the future price of a commodity to rise, they may decide to use the "buy low, sell high" strategy in which they buy the commodity at a low price today in order that they may sell it later when prices rise. How might their actions actually cause a self-fulfilling prophecy in the short run? Use a demand and supply graph in your answer.

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Definitions:

Subculture

A cultural group within a larger culture, often having beliefs or interests at variance with those of the larger culture.

Distinctive Values

Unique or specific beliefs and principles that differentiate one culture, society, or individual from another, guiding behaviors and decisions.

Larger Culture

The dominant set of norms, values, beliefs, and practices that characterizes a larger society or population group.

Rationalization

The process of making actions or outcomes seem reasonable or logical, often by creating a plausible explanation.