Multiple Choice
Which of the following best explains why long-run objectives should take precedence over short-run objectives in economic policy analysis?
71
views
0. Basic Principles of Economics
Positive and Normative Analysis
Multiple Choice
Which of the following statements is an example of a normative statement?
A
The unemployment rate in the country is 5%.
B
Increasing the minimum wage will lead to higher unemployment.
C
The government should increase spending on healthcare.
D
A decrease in taxes will increase consumer spending.
Verified step by step guidance1
Step 1: Understand the difference between positive and normative statements. Positive statements describe facts or cause-and-effect relationships and can be tested or validated. Normative statements express opinions, values, or what ought to be done and cannot be tested empirically.
Step 2: Review each statement to classify it. For example, 'The unemployment rate in the country is 5%' is a positive statement because it states a measurable fact.
Step 3: Analyze 'Increasing the minimum wage will lead to higher unemployment.' This is a positive statement because it predicts a cause-and-effect relationship that can be tested.
Step 4: Look at 'The government should increase spending on healthcare.' This is a normative statement because it expresses a value judgment or recommendation about what ought to happen.
Step 5: Confirm that 'A decrease in taxes will increase consumer spending' is a positive statement as it predicts an outcome that can be tested with data.
Related Videos
Related Practice
