Multiple Choice
Which of the following refers to a general belief about the role and purpose of government?
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0. Basic Principles of Economics
Positive and Normative Analysis
Multiple Choice
In the context of positive and normative analysis, if two variables change in the same direction, which of the following best describes their relationship?
A
Their relationship is purely normative.
B
They are positively correlated.
C
There is no correlation between them.
D
They are negatively correlated.
Verified step by step guidance1
Step 1: Understand the difference between positive and normative analysis. Positive analysis deals with objective, fact-based statements that can be tested, while normative analysis involves subjective, value-based judgments about what ought to be.
Step 2: Recognize that when two variables change in the same direction, it means that as one variable increases, the other also increases, or as one decreases, the other decreases.
Step 3: Recall the concept of correlation in statistics and economics. When two variables move together in the same direction, they are said to be positively correlated.
Step 4: Note that correlation describes the relationship between variables without implying any value judgment, so it is part of positive analysis rather than normative analysis.
Step 5: Conclude that the best description of two variables changing in the same direction is that they are positively correlated.
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