Evaluate the following statement – "Economists are fond of saying that there are positive statements and normative ones but the truth is that all questions are really normative"
What will be an ideal response?
This statement could be interpreted as a normative statement but ironically it may actually be a positive statement. That is it may be a statement that can be verified with the use of logic. Whether it can be proved or not or whether it is true or not is not the issue. It is a statement of fact.
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An economy is at full employment when ________
A) the unemployment rate is zero B) there is no frictional unemployment C) the unemployment rate equals the natural unemployment rate D) there is no structural unemployment
Which of the following statements is false?
A) The Fed has the legal authority to create money out of thin air. B) There is a direct relationship between the money supply and the required reserve ratio. C) The Fed can cause money to disappear into thin air. D) The federal funds market is a market in which banks can borrow money from other banks.