Examine the following statements and determine if they are normative or positive in nature. Explain your answer
a. The U.S. automotive industry registered its highest growth rate in 5 years in 2012; U.S. auto sales increased by 13% compared to 2011 .
b. The U.S. government should increase carbon taxes to control emissions that cause global warming.
a. This is an objective statement about the rate of growth in the U.S. automotive industry. Positive economics is analysis that generates objective descriptions or predictions about the world that can be verified with data. Since data can be used here to verify the rate of growth and whether it is the highest in five years, this is a positive statement.
b. The statement that the government should increase carbon taxes to control emissions is normative since it states what the government ought to do. Normative economics advises individuals and society on their decisions and is almost always dependent on subjective judgments.
You might also like to view...
What is the benefits-received principle? What are two arguments against this principle?
What will be an ideal response?
There is evidence that the rate at which money changed hands rose during the German hyperinflation. This means that
a. velocity rose. If monetary neutrality holds the rise in velocity increased the ratio M/P. b. velocity rose. If monetary neutrality holds the rise in velocity decreased the ratio M/P. c. velocity fell. If monetary neutrality holds the fall in velocity increased the ratio M/P. d. velocity fell. If monetary neutrality holds the fall in velocity decreased the ratio M/P.