Question

Identify the following statements as examples of positive economics, normative economics, or the art of economics:

a. Based on microeconomic models, extending the tax cuts instituted in 2001 will likely continue to further the trend of growing income inequality in the United States.

b. The Federal government needs to raise the minimum wage to $8 per hour so that families will have sufficient income to meet their basic needs.

c. A country’s overall income is more important than how that income is distributed.

d. One in four workers today has no access to employment-based family health coverage.

e. To reduce income inequality in the U.S., we could increase the earned-income tax credit.

f. It is the federal government’s responsibility to assure health coverage for all families.

Answer 1

Positive Economics is when we try to discover what relationships exist and why they exist, whereas Normative Economics adresses the goals, whille Art of Economics is to use what we know to be true from positive economics to bring about normative ends.

a. Based on microeconomic models, extending the tax cuts instituted in 2001 will likely continue to further the trend of growing income inequality in the United States.- Positive Economics

b. The Federal government needs to raise the minimum wage to $8 per hour so that families will have sufficient income to meet their basic needs. - Normative Economics

c. A country’s overall income is more important than how that income is distributed. - Normative Economics

d. One in four workers today has no access to employment-based family health coverage. - Positive Economics

e. To reduce income inequality in the U.S., we could increase the earned-income tax credit. - Art of Economics

f. It is the federal government’s responsibility to assure health coverage for all families. - Normative Economics