Question

POSITIVE VS. NORMATIVE ECONOMICS Instructions: Determine whether each of the following statements is representative of Positive or Normative Economics. Place a “P” on the lines next to all positive statements; place an “N” on the lines next to normative statements.

1. _____ The minimum wage should be raised to $15.00 an hour.

2. _____ If the minimum wage is increased, more people will become unemployed.

3. _____ There is too much crime in the U.S., something should be done about it.

4. _____ If more police are put on the streets, crime rates will fall.

5. _____ In a market, when supply exceeds demand, price tends to fall.

6. _____ When determining tax rates, the government should take into account the income needs of individuals.

7. _____ If the government reduces income taxes, consumption will most likely increase.

8. _____ Inflation is too high in the United States.

9. _____ U.S. trade restrictions cost consumers $19 billion annually in higher prices.

10. _____ NAFTA is likely to make the people of Mexico better off.

11. _____ Increasing the cost of university housing will lead to more people having roommates or seeking off-campus housing.

12. _____ Increasing the cost of university housing is unfair because it places a heavier burden on low income individuals.

13. _____ The government should provide health care to all of its citizens.

14. _____ Prices increased by 1% last year.

15. _____ No family ought to pay more than 25% of its income in taxes.

Answer 1

1.(N) The minimum wage should be raised to $15.00 an hour.

2. (P) If the minimum wage is increased, more people will become unemployed.

3.(N)  There is too much crime in the U.S., something should be done about it.

4.(P) If more police are put on the streets, crime rates will fall.

5. (P) In a market, when supply exceeds demand, price tends to fall.

6. (N) When determining tax rates, the government should take into account the income needs of individuals.

7. (P) If the government reduces income taxes, consumption will most likely increase.

8. (P) Inflation is too high in the United States.

9. (P) U.S. trade restrictions cost consumers $19 billion annually in higher prices.

10. (P) NAFTA is likely to make the people of Mexico better off.

11. (P)  Increasing the cost of university housing will lead to more people having roommates or seeking off-campus housing.

12. (P) Increasing the cost of university housing is unfair because it places a heavier burden on low-income individuals.

13. (N) The government should provide health care to all of its citizens.

14. (P) Prices increased by 1% last year.

15. (N) No family ought to pay more than 25% of its income in taxes.

Positive Statements can be proved, connects cause and effects, descriptive in nature, based on facts, tells you what is objective.

Normative Statements cannot be proved, not based on facts, subjective in nature, tell you should be/have been perspective.