Question

Which of the following is an example of a positive, as opposed to normative, statement? a. The federal government should decrease coverage of unemployment benefits to stimulate the economy out of the recession. b. Congress should agree on lower government spending for the next fiscal year. c. The Federal Reserve Bank should increase interest rates in response to the higher-than-expected inflation in the economy. d. The unemployment rate last year was lower than any other year in the last century.

Answer 1

Answer:

The answer is D) The unemployment rate last year was lower than any other year in the last century

Explanation:

A positive statement is one that can be tested and verified and it is not based on a value judgement. For example, stating that the current level of unemployment is 4.1% is positive because it can be tested and either verified or falsified. Stating that the level of unemployment is 20% is also positive, even if not true because the statement can be tested and falsified.

Positive statement describes and explains various economic phenomena. It is a stream of economics that focuses on the description, quantification, and explanation of economic developments, expectations, and associated phenomena. It relies on objective data analysis, relevant facts, and associated figures.

Answer 2

Answer:

d. The unemployment rate last year was lower than any other year in the last century.

Explanation:

Positive economics is a type of economics that deals with the description, quantification, and explanation of economic developments. It is based on results gotten from data analysis and facts.  In positive economics, the statements is based on facts gotten from evidence or historical events and are precise, descriptive and measurable.

Normative economics is a type of economics based on ideology, opinions, and judgments aimed toward economic development. Normative statements are based on personal perspectives, feelings, or opinions involved in the decision-making process.