Question

Problem 1 Positive vs. Normative Statements

Classify the following statements as positive or normative.

(a) When people must pay higher taxes on their wages, it reduces their incentive to work.

(b) We should lower taxes to encourage people to work more.

(c) The system of public education in this country generates greater benefits to society than the cost of running the system.

(d) Workers in Asia often work in sweatshop conditions earning only pennies an hour.

(e) American workers are more productive and as a result earn higher wages.

(f) In order to preserve the dignity of the American workplace, the government should enact legislation banning imports of low-wage Asian clothing.

(g) Productivity growth is lackluster.

(h) The Trump Treasury department claims tax cuts will stimulate economic growth to 3 percent a year over the next decade, paying for themselves. (adapted from Krugman What the economic Data Don’t Tell Us Jan 28th, 2018, The New York Times.)

(i) The real problem is inequality in income, wealth, property and power.

(j) The decline in unemployment with low gdp growth rates indicates we will have even lower growth rates going forward as we have fewer Americans we can put back to work. (adapted from Krugman What the economic Data Don’t Tell Us Jan 28th, 2018, The New York Times.)

(k) Wages for full time workers are too low.

Answer 1

Positive statements can be proved or disproved but Normative are just opinions.

(a) When people must pay higher taxes on their wages, it reduces their incentive to work.- Positive

(b) We should lower taxes to encourage people to work more.- Normative

(c) The system of public education in this country generates greater benefits to society than the cost of running the system.- Positive

(d) Workers in Asia often work in sweatshop conditions earning only pennies an hour.- Positive

(e) American workers are more productive and as a result earn higher wages- Positive

(f) In order to preserve the dignity of the American workplace, the government should enact legislation banning imports of low-wage Asian clothing.-Normative

(g) Productivity growth is lackluster.- Normative

(h) The Trump Treasury department claims tax cuts will stimulate economic growth to 3 percent a year over the next decade, paying for themselves. (adapted from Krugman What the economic Data Don’t Tell Us Jan 28th, 2018, The New York Times.)- Normative

(i) The real problem is inequality in income, wealth, property and power.- Normative

(j) The decline in unemployment with low gdp growth rates indicates we will have even lower growth rates going forward as we have fewer Americans we can put back to work. (adapted from Krugman What the economic Data Don’t Tell Us Jan 28th, 2018, The New York Times.)-Positive

(k) Wages for full time workers are too low. - Normative