Question

Classify each of the following statements as positive (fact based) or normative (opinion based). Explain. 1. Society faces a short-run tradeoff between inflation and unemployment. 2. In a market, when quantity supplied exceeds quantity demanded, price tends to fall. 3. When determining tax rates, the government should take into account the income needs of individuals. 4. The Federal Reserve should reduce the rate of growth of money. 5. Lower tax rates encourage more work and more saving. Positive economics is objective and fact based, while normative economics is subjective and values based. Positive economic statements do not have to be correct, but they must be able to be tested and proved or disproved. Normative economic statements are opinion based, so they cannot be proved or disproved.

can you please explain these as well

Answer 1

1) Solution: positive statement
Explanation: The statement deals with how the economy is, not how it ought to be. As the data is examined by the economists and found that there is a negative relationship in the short- run between unemployment and inflation, thus statement is a fact, and we can conclude to be a positive statement.

2) Solution: positive statement
Explanation: The statement is based on fact observed by the economists, and we can conclude to be a positive statement.

3) Solution: normative statement
Explanation: It is an opinion about something that ought to be done and not on the facts, thus we can conclude that it is a statement.

4) Solution: normative statement
Explanation: The statement that the FED must decline the rate of money growth is a normative statement. It is an opinion about something that ought to be done, not how actual world is, thus we can conclude that it is a statement.

5) Solution: positive statement
Explanation: The statement that a reduction in the tax rates encourages more saving and more work is a positive statement. Economists examined the relationship among the tax rates and work, as well as the relationship among the tax of rates and saving. It depicts a negative relationship in both scenarios. Thus the statement depicts how the world is and can conclude a positive statement.

Answer 2

ANSWER :

First one : Positive since it is stated as a fact.

Second one : Positive  since it is stated as a fact.

Third one : Normative since it makes a suggestion or recommendation.

Fourth one : Normative since it makes a suggestion or recommendation.

Fifth one : Positive since it is stated as a fact.