A positive statement is prescriptive—it prescribes what should be done

In terms of efficiency, trade diversion is a _____ desirable outcome of a regional free-trade agreement, because trade is diverted from the ___________ producer to the __________ producer .

a. more; high-cost; low-cost b. more; less deserving; more deserving c. less; low-cost; high-cost d. less; foreign; domestic

According to the Taylor rule, when inflation and/or output is above its target, then:

a. the federal funds rate must be negative. b. the federal funds rate must be above its target. c. the federal funds rate must be above inflation. d. none of the above are correct.