Question 1

Why did the revenues of Aramex drop by an average of 9 percent in the first two quarters on 2009?&#10;A) A new competitor had entered the market.&#10;B) Aramex management had increase prices in the preceding quarter.&#10;C) There was a global slowdown in freight forwarding activity.&#10;D) Tariffs were introduced that restricted the Jordanian export trade.

Accepted Answer

The global slowdown in freight forwarding activity is the reason for the drop in Aramex's revenues, as it directly affected the volume of goods being shipped internationally, impacting companies in the logistics and freight forwarding industry.

Question 2

Spending on the armed forces is categorized as government purchases. How do increases in spending on wars affect the aggregate demand curve?&#10;A) They shift the aggregate demand curve to the left.&#10;B) They shift the aggregate demand curve to the right.&#10;C) They move the economy down along a stationary aggregate demand curve.&#10;D) They move the economy up along a stationary aggregate demand curve.

Accepted Answer

Increases in government spending, including spending on the armed forces and wars, directly increase aggregate demand. This is because government spending is a component of aggregate demand, and an increase in this spending will shift the aggregate demand curve to the right, indicating a higher level of demand at each price level.

Question 3

Chinese toy exports were hurt in 2007 as a result of lead paint fears. How would this decrease in exports have affected China's aggregate demand curve?&#10;A) Aggregate demand would have shifted to the left.&#10;B) Aggregate demand would not have shifted, but there would have been a movement up the aggregate demand curve.&#10;C) Aggregate demand would not have shifted, but there would have been a movement down the aggregate demand curve.&#10;D) Aggregate demand would have shifted to the right.

Accepted Answer

A decrease in exports would reduce the total demand for Chinese goods, leading to a leftward shift in the aggregate demand curve.

Question 4

Last week, 5.5 Egyptian pounds could purchase one U.S. dollar. This week, it takes six Egyptian pounds to purchase one U.S. dollar. This change in the value of the dollar will ________ exports from the U.S. to Egypt and ________ U.S. aggregate demand.

A) increase; decrease
B) decrease; increase
C) increase; increase
D) decrease; decrease

Accepted Answer

The answer of Last week, 5.5 Egyptian pounds could purchase...

Question 5

Does an Egyptian consumer who buys a Kushari dish made in Egypt contribute more to Egyptian aggregate demand than does a consumer who purchases a McDonalds?&#10;A) Yes, because the Kushari is made locally.&#10;B) No, because McDonalds are made in Egypt under licence.&#10;C) Yes, because McDonalds in an American company.&#10;D) It is impossible to tell, without knowing where the various ingredients come from..

Accepted Answer

It is impossible to determine the impact on aggregate demand without knowing the origin of the ingredients and the distribution of profits. Both purchases could contribute similarly if the McDonald's meal is produced locally and profits are reinvested in Egypt.

Question 6

An increase in investment causes the price level to ________ in the short run and ________ in the long run.&#10;A) decrease; increase&#10;B) decrease; decrease further&#10;C) increase; increase further&#10;D) increase; decrease

Accepted Answer

An increase in investment boosts economic activity, leading to higher demand for goods and services in the short run, which increases the price level. Over the long run, this heightened demand continues to exert upward pressure on prices, causing them to increase further.

Question 7

Which of the following was an inflationary pressure causing high inflation rates in Saudi Arabia in 2008?&#10;A) Decreasing domestic rents&#10;B) Increasing food prices&#10;C) Low domestic demand&#10;D) Low oil export prices

Accepted Answer

Increasing food prices were a significant factor contributing to inflationary pressures in many countries, including Saudi Arabia, during 2008. Rising food prices can lead to broader inflation by increasing the cost of living and prompting demands for higher wages.

Question 8

By mid -2008, U.S. real GDP continued to grow despite increases in oil prices from about $34 per barrel in 2004 to over $140 per barrel. One reason for this is&#10;A) there is a lag of about two years between oil price increases and declines in real GDP.&#10;B) there has been a 60 percent increase in the number of automobiles powered by electricity and other non -oil related sources of fuel.&#10;C) Since the 1970s the U.S. economy has reduced the amount of oil used per dollar of GDP by about 60 percent.&#10;D) most firms have switched from oil to natural gas as a source of energy to produce goods and services.

Accepted Answer

Since the 1970s, the U.S. economy has become more energy-efficient, significantly reducing the amount of oil used per dollar of GDP. This efficiency improvement has helped to mitigate the impact of rising oil prices on economic growth.

Question 9

What did FedEx Middle East do to meet the challenge of the global recession in 2009?&#10;A) Increase costs and offer higher price options for customers&#10;B) Increase costs and offer lower price options for customers&#10;C) Cut costs and offer higher price options for customers&#10;D) Cut costs and offer lower price options for customers

Accepted Answer

FedEx Middle East responded to the global recession in 2009 by cutting costs and offering lower price options for customers, aiming to maintain or grow their customer base despite the economic downturn.

Deck 20: Aggregate Demand and Aggregate Supply Analysis