classify each of the following statement as a positive or normative and explain
1. society faces short run trade off between inflation and unemployment.
2. a reduction in the rate of growth of money will reduce the rate of inflation.
3. the bank of ghana should reduce the rate of growth of money.
4. society ought to require welfare recipient to look for jobs.
5.lower tax rates encourage more workers and more savings.
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In economics, when we say positive statement, we mean statements that are objective, and that simply state facts. Positive economics simply describes and explain economic events - or simply states what is happening. On the other hand, normative statements are those that suggest certain actions towards a certain end. Normative economics deals with providing value judgements regarding economic events. In other words, positive statements answers questions of the form What is... while normative statements pertain to those that respond to What ought to be....
Hence, for each of the sentences:
1. Positive because it simply explains what the society is facing.
2. Normative because it suggests an action - to reduce rate of growth of money - to reduce inflation rate.
3. Normative because it suggests the bank to reduce rate of growth of money.
4. Normative because it forwards the need for job-seeking.
5. Positive because it simply explains the relationship between tax rate and workers and savings.
Notice that positive statements are only concerned with reality, or the current situation. On the other hand, normative statements usually relate to actions to change what is happening.
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