Multiple Choice
Which of the following statements about the efficient markets hypothesis is correct?
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0. Basic Principles of Economics
Positive and Normative Analysis
Multiple Choice
Which type of analysis focuses on effects that result from the basic economic structure of an entire field?
A
Marginal analysis
B
Normative analysis
C
Positive analysis
D
Behavioral analysis
Verified step by step guidance1
Understand the key terms: Marginal analysis examines the effects of small changes in economic variables; Normative analysis involves value judgments about what ought to be; Behavioral analysis studies how individuals actually behave.
Recognize that the question asks about analysis focusing on effects resulting from the basic economic structure of an entire field, which means looking at objective cause-and-effect relationships without value judgments.
Recall that Positive analysis is concerned with describing and explaining economic phenomena as they are, focusing on factual and testable statements about economic behavior and structures.
Compare the definitions and identify that Positive analysis fits best because it studies the outcomes derived from the economic structure itself, rather than prescribing what should happen or focusing on individual behavior.
Conclude that the correct type of analysis is Positive analysis, as it deals with the effects stemming from the fundamental economic framework of a field.
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