is made for which no secondary market exists to liquidate it. the purchase of a durable good is another case. we know, however, that in general there will always be some way to get rid of the good, but part of its cost is impossible to recover – it is a sunk cost. a firm can build a plant, for instance, but to get rid of it the firm will have to resell it below cost because of specific features that prospective buyers will not appreciate. in an environment of certainty, expenses will be incurred whenever the benefits outweigh the costs. therefore, the choice is between spending and not spending. but with uncertainty and irreversibility, the choice is no longer between spending and not spending, but rather between spending, not spending, and waiting. this option has a value, because as time goes by, uncertainty fades. thus, the more uncertain a choice is, the more profitable it is to wait. imagine the case of a firm having to invest. such investment consists of enlarging its facilities and purchasing new capital goods. if things go right, the investment will be very profitable. if things go wrong, the benefits of investing will be very low, and the present value of the project will be negative. hence, had the firm known that things were going to go wrong, it would have preferred not to invest. if the passing of time helps to know with more certainty whether things will go right or wrong, the firm may find it convenient to wait and see. waiting permits it to keep the choice between investing and not investing open, which is not the case when the investment has already been made. thus the investment can be analyzed with the theory of options. the firm must balance the cost of postponing the investment with the benefit of learning more about the situation and making a better informed decision. then, the larger the uncertainty, the greater the benefit of waiting. this same logic can be applied to a consumer that must decide on the purchase of a durable good, but is uncertain about his future income. if the probability of losing his job increases, it may be advisable to wait before making the decision. although this analysis is very simple intuitively, it is not easy to formalize. a consumer can sell his car or an electronic device if he loses his income, but it will be at a cost. the higher this cost, the more irreversible the decision becomes. 4 this idea permits us to explain why the

the fed funds rate at the minimum level where it is today, which reflects the magnitude of the problem. meanwhile, information from china reveals its economy is growing strongly. it also shows a relief of inflationary pressures in that country, providing more space for policy - making. the prices of commodities, especially copper, have recovered significantly in the past few weeks. actually, today ’ s price of this metal is substantially higher than we had forecast for the year. the baseline scenario in our december monetary policy report is still totally valid. our aforementioned report and the market expect a moderate deceleration of chile ’ s growth. our economy is forecast to grow in the range of 3. 75 % to 4. 75 % in 2012, with y - o - y rates for every expenditure component below those of 2011. this would be the response both to a normal, sound convergence of the economy to trend - consistent growth rates, and to the effects of a less favorable external environment. the latest data show our economy gradually adjusting to lower growth rates, at the same time that expenditure indicators are still showing substantial growth. sure enough, there are differences across sectors. in some branches of manufacturing, especially export - oriented ones, dynamism is milder. in other sectors, such as retail, there is some degree of higher bis central bankers ’ speeches caution in inventory management. by contrast, the consumption of durable and capital goods, which are normally the first to react to a change in the agents ’ expectations, remains strong, the same as the construction sector. meanwhile, various indicators signal a tight labor market. it has been recently reported that in december, the unemployment rate as measured by the universidad de chile survey for greater santiago dropped to a 15 - year low, and that the creation of new jobs has, for the most part, been accounted for by salaried employment. turning to the debt burden of households and firms, as we noted in our financial stability report of the second half of last year, the financial indicators of the corporate sector look favorable, with a stable and limited currency mismatch. the household average shows no financial deterioration because the increase in private consumption has been accompanied by an increase in labor income. however, households as well as firms must keep a watchful attitude facing possible risk scenarios. as for banks, the sector has adequate capital levels to absorb the materialization of a severe risk scenario. as shown in our last financial stability report, stress tests indicate that the banking system ’ s current