Multiple Choice
Which of the following statements best describes how the market system promotes progress?
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0. Basic Principles of Economics
Positive and Normative Analysis
Multiple Choice
Which of the following most helps inform policy decision-makers?
A
Personal opinions, because they reflect individual preferences.
B
Historical anecdotes, because they illustrate past events.
C
Normative analysis, because it describes what ought to be based on value judgments.
D
Positive analysis, because it provides objective facts about economic relationships.
Verified step by step guidance1
Understand the difference between normative and positive analysis: Normative analysis involves value judgments about what ought to be, while positive analysis focuses on objective facts and cause-effect relationships.
Recognize that policy decision-makers need reliable, objective information to make informed decisions, which is provided by positive analysis rather than personal opinions or anecdotes.
Identify that personal opinions reflect subjective preferences and may be biased, so they are less useful for policy formulation.
Note that historical anecdotes provide examples but may not represent generalizable or current economic relationships.
Conclude that positive analysis, by providing testable and objective facts about economic relationships, most effectively informs policy decision-makers.
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