Principles of Economics (12th Edition)
12th Edition
ISBN: 9780134078779
Author: Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher: PEARSON
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Question
Chapter 1, Problem 3.2P
To determine
The positive and normative statements.
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Which of the following statements are examples of positive economic analysis? Which are examples of normative analysis?
c. Florida should devote all revenues from its state lottery to improving public education.
d. Eliminating the trade embargo with Cuba would increase the number of Cuban cigars available in the United States.
e. As a public safety measure, the state of Texas should repeal legislation that allows people with concealed handgun permits to carry concealed weapons on college campuses.
Question 12 of 23
Classify each of the statements as an example of positive or normative analysis..
The
sugar quota in the United States costs consumers $6.08 billion a year.
Positive
Higher tariffs on imported automobiles would decrease the demand for Normative
foreign made cars.
International trade should be be limited because it can cause some workers
Positive
to lose their jobs.
International trade makes some people better off and some people Normative
worse off.
The U.S. should impose import quotas in the market for consumer
Normative
electronics to help domestic workers.
The sugar quota in the U.S. is good public policy and should be
Positive
made stronger.
Answer Bank
Normative
Positive
MacBook Air
1. Which of the following statements is a normative as opposed to a positive economic statement? A)If the price of cars
goes up, people buy fewer cars. B)When a government prints too much money, inflation tends to rise. C)Labor unions
should be allowed to organize in every country. D)Consumer spending helps to create jobs. 2. The production possibilities
curve shifts outward when A)there is an increase in resources or technology .B)we produce more consumption goods over
productive investment in equipment. C)the economy is producing efficiently. D)the law of increasing additional cost takes
hold.
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Similar questions
- Which of the following statements are examples of positive economic analysis? Which are examples of normative analysis? a. A devaluation of the U.S. dollar would increase exports from the United States. b. Increasing the federal tax on gasoline would cause shipping costs in the United States to increase. c. Florida should devote all revenues from its state lottery to improving public education.arrow_forwardClassify 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 savingarrow_forwardBen says that "An increase in the tax on beer will raise its price." Holly argues that "Taxes should be increased on beer because college students drink too much." We can conclude that: Ben's statement is normative, but Holly's is positive. Holly's statement is normative, but Ben's is positive. Both statements are normative. Both statements are positive.arrow_forward
- Suppose that one summer the weather is very hot. How does this event affect the market for ice cream? And How a decrease in supply of ice cream affects the equilibrium price and quantity? Draw the graph according to the situations above. Which of the following statements are examples of positive economic analysis? Which are examples of normative analysis?a. The inheritance tax should be repealed because it is unfair.b. Allowing Chile to join NAFTA would cause wine prices in the United States to drop.c. The first priorities of the new regime in the Democratic Republic of Congo (DRC, formerly Zaire) should be to rebuild schools and highways and to provide basic health care.arrow_forwardWhat is the difference between positive and normative analysis? Which of the following statements would entail positive analysis, and which normative analysis? Internet auction companies will erode the profits of local automobile dealerships. The government should impose special taxes on sales of merchandise made over the Internet.arrow_forwardWhich of the following statements does NOT illustrate normative economic thought? a. Monopolies should not be allowed to exist. b. The health system should be nationalized. c. The corporate tax rates should be raised. d. The demand for a normal good will decrease when price increases. e. Government should do more to regulate markets.arrow_forward
- Classify each of the following statements as positive or normative. Explain. Society faces a short-run trade-off between inflation and unemployment. A reduction in the rate of growth of money will reduce the rate of inflation. The Federal Reserve should reduce the rate of growth of money. Society ought to require welfare recipients to look for jobs. Lower tax rates encourage more work and more saving.arrow_forwardb. What is the difference between positive and normative analysis? Which of the following statements would entail positive analysis, and which normative analysis? i. Internet auction companies will erode the profits of local automobile dealerships. ii. The government should impose special taxes on sales of merchandise made over the Internet. c. Why is the circular flow model important?arrow_forwardCan you confirm that I am correct with these positive and normative statements: Positive statement: When oil production slows in Texas, employment and tax revenues decline, and budget cuts at the state and local levels often follow. (Craymer has estimated that the state loses $85 million per year for every $1 decrease in oil prices.) Normative statement:If Russia agrees to production cuts and COVID-19 goes dormant in the hot summer months, as some experts expect, Texas’ coffers will have time to recover before lawmakers convene in 2021 to write a new budget. Or would this be a normative statement:Experts said Texas is better positioned to handle an oil price collapse today thanks to a diversified economy. The last collapse in oil prices, in 2014, also forced the industry to cut costs and otherwise become more efficient. But University of Texas at Austin energy resources professor Michael Webber said COVID-19 throws an unprecedented economic variable into the mix.arrow_forward
- Explain the difference between positive and normative economics Consider the following two statements. In each case, explain briefly your answer: a. A 5 percent fall in the unemployment rate will lead to a 2 percent increase in the inflation rate" b. "Pollution in developing countries is one of the biggest global environmental problems" Which of the these statements is an example of "positive" economics Which of these statements in an example of :normative "economicsarrow_forwardWhy is it important to be able to distinguish positive from normative statements about economic policy? Question 8 options: Positive statements are always true and are the basis of economic policy while normative statements are false and should NEVER be used. Positive statements help us understand the value judgments toward a particular policy, while normative statements reflect the economy's response. Positive statements help us understand the economy's response to a particular policy, while normative statements reflect value judgments. Positive statements help us understand the good results of a policy change, and normative statements help us understand the negative results.arrow_forwardProblem 1 Is each of the following a positive or normative statement? If it is a positive statement, write a normative statement that addresses the same issue. If it is a normative statement, write a positive statement that addresses the same issue. a.) Decreasing tax rates causes total tax revenue to increase. b.) The U.S. government should eliminate seat belt requirements for new vehicles. c.) The College of New Jersey should decrease tuition and fees for students. d.) If a state adopts "Right to Work" laws, wages will go down.arrow_forward
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