Multiple Choice
Which of the following types of analysis most benefits federal policymakers politically?
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0. Basic Principles of Economics
Positive and Normative Analysis
Multiple Choice
Which of the following is an example of a normative, as opposed to a positive, statement?
A
A decrease in income taxes will result in higher consumer spending.
B
An increase in the minimum wage leads to higher labor costs for firms.
C
The government should increase the minimum wage to improve living standards.
D
The unemployment rate rose by 2% last year.
Verified step by step guidance1
Understand the difference between positive and normative statements: Positive statements describe the world as it is and can be tested or validated with data, while normative statements express opinions or what ought to be and cannot be tested empirically.
Examine each statement to determine if it is testable (positive) or opinion-based (normative):
For example, "A decrease in income taxes will result in higher consumer spending" is a positive statement because it predicts an outcome that can be tested with data.
"An increase in the minimum wage leads to higher labor costs for firms" is also positive, as it describes a cause-effect relationship that can be verified.
"The government should increase the minimum wage to improve living standards" is normative because it expresses a value judgment or recommendation about what ought to happen.
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