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Oil Prices Dropped Sharply from a Peak of US$147 Per

Question 2

Multiple Choice

Oil prices dropped sharply from a peak of US$147 per barrel in August 2008 to a low price of US$30 by the end of the same year. Despite a decreased government revenues, the governments of the Arab Gulf countries increased their spending. What was the logic behind their move?


A) Governments' demand for goods and services was increased for social and political purposes.
B) Governments' demand for goods and services was increased to prevent sharp price increases
C) Government spending -increased to compensate for the fall in private consumption and investment expenditures.
D) There was no logic behind what the Arab Gulf governments did.

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