Classify each of the following statements as positive or normative:
Explain.
a.Society faces a short-run trade-off between inflation and unemployment.
b.A reduction in the rate of money growth will reduce the rate of inflation.
c.The Federal Reserve should reduce the rate of money growth.
d. Lower taxes encourage more work and more savings.
Classify each of the following statements as positive or normative:
Explain.
a.Society faces a short-run trade-off between inflation and unemployment.
b.A reduction in the rate of money growth will reduce the rate of inflation.
c.The Federal Reserve should reduce the rate of money growth.
d. Lower taxes encourage more work and more savings.
Related textbook solutions
Related questions
For each of the following statements, indicate whether they are positive, normative, or both.
a. If the Federal Reserve raises interest rates, demand for housing is likely to fall.
| Both a normative and a positive statement | |
| Positive statement | |
| Normative statement | |
| Neither a normative nor a positive statement |
b. The Federal Reserve should raise interest rates to keep inflation at an acceptably low level.
| Both a normative and a positive statement | |
| Normative statement | |
| Positive statement | |
| Neither a normative nor a positive statement |
c. Stock prices are likely to fall over the next year as the economy slows.
| Neither a normative nor a positive statement | |
| Both a normative and a positive statement | |
| Normative statement | |
| Positive statement |
d. A reduction in the capital gains tax (the tax on profits made in the stock market) would lead to a 10 to 20 percent increase in stock prices.
| Normative statement | |
| Neither a normative nor a positive statement | |
| Both a normative and a positive statement | |
| Positive statement |
e. Congress should not reduce capital gains taxes without also providing tax breaks for lower-income people.
| Normative statement | |
| Positive statement | |
| Neither a normative nor a positive statement | |
| Both a normative and a positive statement |
