Answer to Question #246706 in Microeconomics for saif

Question

Classify each of the following statements as positive or

normative. Explain.

a. Society faces a short-run trade-off between

inflation and unemployment.

b. A reduction in the rate of money growth will

reduce the rate of inflation.

c. The Federal Reserve should reduce the rate of

money growth.

d. Society ought to require welfare recipients to look

for jobs.

e. Lower tax rates encourage more work and more

saving.

Answer 1

First, we have to define what are positive and normative statements. A positive statement describes facts. That is to say, it is a statement that is objective. On the other hand, a normative statement includes a type of value judgment. That is to say, this type of statement is subjective and has an opinion. Based on these definitions, we can classify the statements as follows:

a. This statement is descriptive and objective. Therefore, it is a positive statement.

b. This statement shows cause and effect without any opinion. Therefore, it is a positive statement.

c.This statement includes an opinion and implies that the Fed "should" do something. Therefore, it is a normative statement.

d. This statement also is an opinion and has a value judgment when the term "ought" is included. Therefore, it is a normative statement.

e. This statement also describes cause and effect and there is no opinion. Therefore, it is a positive statement.