Answer to Question #317924 in Microeconomics for Neeya

Question

3. 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 Central Bank or 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

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.