Positive economics answers the question, "What ought to be?" Normative economics predicts the consequences of alternative actions, answering the questions, "What is?" or "What will be?"

The experience of the HPAEs has brought attention to predictions about income inequality made by Kuznets. He predicted that at first income inequality would ________ as economies began to develop. In the HPAEs experience it ________

A) rise; rose B) decrease; decreased C) rise; fell D) fall; rose E) There was no pattern.

If the government institutes a specific tax for a good that has a perfectly inelastic demand curve

A) the producer passes the entire tax on to the consumer. B) the producer must absorb the entire tax. C) the producer can generally only pass part of the tax onto the consumer. D) the equilibrium price drops.