The main policy tool for manipulating consumer spending is personal income tax, but this tool takes time to have an effect.

Imagine a hypothetical world in which, over the last fifty years, both real GDP and prices have trended downward in most countries. Continuing falls in the level of real GDP and the price level can be explained by

a) neither technological ability nor changes in the money supply can explain continuing falls in the level of real GDP contraction and the price level. b) continuing losses in technological ability alone. c) continuing losses in technological ability and continuing decreases in the money supply. d) continuing decreases in the money supply along.

The prices in an economy fell by 1.12 percent during a given financial year. The real GDP of the economy in that year was $4.67 trillion. The value of the GDP deflator of the economy in that year was equal to _____

a. 104.67 b. 95.33 c. 101.12 d. 98.88