Question

Reply to this discussion question: Categorize each of the following statements as examples of either positive or normative economics, and as examples of either macroeconomics or microeconomics and explain your choice.

A. Monetary policymakers should do everything they can to reduce the unemployment rate.

B. If there is an increase in the price of gasoline, the quantity purchased will decrease.

C. Budget deficits typically lead to higher rates of inflation.

D. It is important to invest in preschool programs to improve labor-market outcomes for individuals when they reach adulthood.

Answer 1

Positive economics is a statement which is objective and fact based, whereas Normative economics is subjective and value based.

Macro economics, which handles economic aspects at the national level whereas microeconomics handles at the individual level

A. Positive economics as unemployment rate can be measured and it is macroeconomics

B. Positive economics as quantity decreases can be measured and it is microeconomics

C. Normative economics as budget deficits are not the only reason for inflation and it is macroeconomics

D. Normative economics as it is subjective and is microeconomics