Question

Which of the following are positive statements , which are normative statements and which could be either depending on the context?

a) Cutting the higher rates of income tax will redistribute incomes from the poor to the rich.

b) It is wrong that inflation should be reduced if this means that there will be higher unemployment.

c) It is wrong to state that putting up interest rates in order to prevent the exchange rate falling.

d) The government should raise interest rates in order to prevent the exchange rate falling.

e) Current government policies should reduce unemployment.

Answer 1

Positive statements: describes and explains various economic phenomena or "what is" scenario.

Normative statements: focuses on values of economic fairness or "what should/ought to be".

Positive economics is based on facts , normative is basically value judgement.

A). Positive . It is a given fact.

B). Normative. Economic unjust is being talked about with higher inflation rate.

C). Positive. A false cause and effect relation is being pointed out.

D). Could be either, depending on the context. It could be a positive statement if this can be verified or normative , if this is a suggestion.

E). Normative. "What should be" is being pointed out.